Microtubules (MTs) often form a polarized array with minus ends anchored at the centrosome and plus ends extended toward the cell margins. Plus ends display behavior known as dynamic instability-transitions between rapid shortening and slow growth. It is known that dynamic instability is regulated locally to ensure entry of MTs into nascent areas of the cytoplasm, but details of this regulation remain largely unknown. Here, we test an alternative hypothesis for the local regulation of MT behavior. We used microsurgery to isolate a portion of peripheral cytoplasm from MTs growing from the centrosome, creating cytoplasmic areas locally depleted of MTs. We found that in sparsely populated areas MT plus ends persistently grew or paused but never shortened. In contrast, plus ends that entered regions of cytoplasm densely populated with MTs frequently transitioned to shortening. Persistent growth of MTs in sparsely populated areas could not be explained by a local increase in concentration of free tubulin subunits or elevation of Rac1 activity proposed to enhance MT growth at the cell leading edge during locomotion. These observations suggest the existence of a MT density-dependent mechanism regulating MT dynamics that determines dynamic instability of MTs in densely populated areas of the cytoplasm and persistent growth in sparsely populated areas.