In budding yeast, activation of the small Ras-like GTPase Tem1 triggers exit from mitosis and cytokinesis. Tem1 is regulated by Bub2/Bfa1, a two-component GTPase-activating protein (GAP), and by Lte1, a putative guanine nucleotide exchange factor. Lte1 is confined to the bud cortex, and its spatial separation from Tem1 at the spindle pole body (SPB) is important to prevent untimely exit from mitosis. The pathways contributing to Lte1 asymmetry have not been elucidated. Here we show that establishment of Lte1 at the cortex occurs by an actin-independent mechanism, which requires activation of Cdc28/Cln kinase at START and Cdc42, a key regulator of cell polarity and cytoskeletal organisation. This defines a novel role for Cdc42 in late mitotic events. In turn, dissociation of Lte1 from the cortex in telophase depends on activation of the Cdc14 phosphatase. Ectopic expression of Cdc14 at metaphase results in premature dephosphorylation of Lte1 coincident with its release from the cortex. In vitro phosphatase assays confirm that Lte1 is a direct substrate for Cdc14. Our results suggest that the asymmetry in Lte1 localisation is imposed by Cdc28-dependent phosphorylation. Finally, we report a mutational analysis undertaken to investigate intrinsic Lte1 determinants for localisation. Our data suggest that an intrameric interaction between the N-and C-terminal regions of Lte1 is important for cortex association.