Forkhead transcription factors of the FOXO family are important downstream targets of the phosphatidylinositol 3-kinase pathway, which has been shown to play a critical role in cell proliferation and cell survival. Activation of FOXOs can block cellular proliferation and drive cells into a quiescent state. In certain cell types, this cell cycle arrest is dependent on the transcriptional induction of the cell-cycle inhibitor p27kip. In granulosa cells, which go through an exponential growth phase during development of the ovarian follicle, we find that FoxO1a is a key regulator of the G1/S transition in these cells. Overexpression of a dominant-negative version of FoxO1a (Foxo1a-Delta256; a C-terminal truncation mutant that possesses a functional DNA-binding domain, but lacks a transactivation domain) causes a dramatic increase in S-phase cells (>8-fold increase by both DNA content and bromodeoxyuridine incorporation assays). Surprisingly, this is not dependent on transactivation of the p27kip gene. We provide evidence that when FoxO1a activity is impeded, p27kip protein is largely localized to the cytosol, suggesting that FoxO1a blocks cell cycle entry by altering the compartmentalization of p27kip within the cell, increasing its concentration in the nucleus. These studies demonstrate for the first time that FoxO1a can regulate p27kip nuclear localization.