The action of cyclin-dependent kinases (CDKs) is regulated by phosphorylation, cyclin levels, the abundance of CDK inhibitors, and, as recently has been shown for cyclin B/cdc2, their localization. It is unclear how localization regulates the action of cyclin E/Cdk2 and its inhibitors. Here, we show that the closest known Xenopus laevis homolog of mammalian Cdk2 inhibitors p27(Kip1) and p21(CIP1), Xic1, is concentrated, ubiquitinated, and destroyed in the nucleus. Furthermore, Xic1 destruction requires nuclear import, but not nuclear export, and requires the formation of a transport-competent nuclear envelope, but not interactions between the lamina and chromatin. We show that (i) cyclin E/Cdk2 and Xic1 are transported into the nucleus as a complex and that Xic1 destruction requires the activity of cyclin E, (ii) that phosphorylation of Xic1 by cyclin E/Cdk2 bypasses the requirement for nuclear formation, and (iii) that the phosphorylation of Xic1 by cyclin E/Cdk2 is concentration dependent and likely realized through second-order interactions between stable cyclin E/Cdk2/Xic1 ternary complexes. Based on these results we propose a model wherein nuclear accumulation of the cyclin E/Cdk2/Xic1 complex triggers a concentration-dependent switch that promotes the phosphorylation of Xic1 and, consequently, its ubiquitination and destruction, thus allowing subsequent activation of cyclin E/Cdk2.