In the cyanobacterium Synechococcus elongatus PCC 7942, the KaiA, KaiB and KaiC proteins are essential for generation of circadian rhythms. We quantitatively analyzed the intracellular dynamics of these proteins and found a circadian rhythm in the membrane/cytosolic localization of KaiB, such that KaiB interacts with a KaiA-KaiC complex during the late subjective night. KaiB-KaiC binding is accompanied by a dramatic reduction in KaiC phosphorylation and followed by dissociation of the clock protein complex(es). KaiB attenuated KaiA-enhanced phosphorylation both in vitro and in vivo. Based on these results, we propose a novel role for KaiB in a regulatory link among subcellular localization, protein-protein interactions and post-translational modification of Kai proteins in the cyanobacterial clock system.