The trimeric CAK complex functions in cell cycle control by phosphorylating and activating Cdks while TFIIH-linked CAK functions in transcription. CAK also associates into a tetramer with Xpd, and our analysis of young Drosophila embryos that do not require transcription now suggests a cell cycle function for this interaction. xpd is essential for the coordination and rapid progression of the mitotic divisions during the late nuclear division cycles. Lack of Xpd also causes defects in the dynamics of the mitotic spindle and chromosomal instability as seen in the failure to segregate chromosomes properly during ana- and telophase. These defects appear to be also nucleotide excision repair (NER)-independent. In the absence of Xpd, misrouted spindle microtubules attach to chromosomes of neighboring mitotic figures, removing them from their normal location and causing multipolar spindles and aneuploidy. Lack of Xpd also causes changes in the dynamics of subcellular and temporal distribution of the CAK component Cdk7 and local mitotic kinase activity. xpd thus functions normally to re-localize Cdk7(CAK) to different subcellular compartments, apparently removing it from its cell cycle substrate, the mitotic Cdk. This work proves that the multitask protein Xpd also plays an essential role in cell cycle regulation that appears to be independent of transcription or NER. Xpd dynamically localizes Cdk7/CAK to and away from subcellular substrates, thereby controlling local mitotic kinase activity. Possibly through this activity, xpd controls spindle dynamics and chromosome segregation in our model system. This novel role of xpd should also lead to new insights into the understanding of the neurological and cancer aspects of the human XPD disease phenotypes.