The dual specificity phosphatase and oncogene Cdc25B has been implicated in the G2/M cell cycle checkpoint, but the mode by which it is regulated remains poorly understood. Regional subcellular redistribution of proteins represents a unique potential regulatory mechanism. Thus, we examined in live cells the subcellular localization characteristics of Cdc25B2 and Cdc25B3 fused to green fluorescent protein. Cdc25B2 partitioned primarily in the cytoplasm during G1 and progressively migrated to the nucleus as cells transited from S to G2/M phase. In contrast, Cdc25B3 maintained a homogeneously staining diffuse phenotype irrespective of cell cycle phase. Treatment of the Cdc25B2-green fluorescent protein stable transfectants with vanadate inhibited the cell cycle dependency of intracellular distribution, while okadaic acid had little effect except in G1, suggesting regulation by at least one phosphorylation-dependent pathway. The DNA topoisomerase II poison and DNA damaging agent, etoposide, inhibited nuclear localization of Cdc25B2 in S phase, possibly by invoking a sequestration cascade. Thus, differences in the spatial distribution of Cdc25B subtypes exist within cells and the 41 amino acid insert in the N-terminus of the Cdc25B3 splice variant encodes an important inhibitory determinant for such regulation. The subcellular redistribution of Cdc25B2 could be functionally important for G2/M checkpoint regulation.