The Caenorhabditis elegans daf-2/insulin-like signaling pathway is critical for regulating development, longevity, metabolism and stress resistance. We identified the 14-3-3 protein FTT-2 to be a new regulatory component of this pathway. We found that RNAi knock down of ftt-2 specifically enhanced the daf-2-mediated dauer formation phenotype. Furthermore, ftt-2 knock down caused the nuclear accumulation of DAF-16/FOXO, the forkhead transcription factor that is the major downstream effecter of daf-2/insulin-like signaling, and enhanced the transcriptional activities of DAF-16. In contrast to ftt-2, RNAi knock down of par-5/ftt-1, the only other gene predicted to encode a 14-3-3 protein in C. elegans, did not show any notable effect on dauer formation, DAF-16 localization, or DAF-16 downstream gene transcription, underscoring the functional specification of FTT-2 and PAR-5 despite their high sequence homology. Using co-immunoprecipitation, we revealed that FTT-2 formed a complex with GFP-fused DAF-16 in C. elegans. Our results indicate that FTT-2 binds to DAF-16 in C. elegans and regulates DAF-16 by sequestering it in the cytoplasm. A similar mechanism of regulation of FOXO by 14-3-3zeta has been reported in mammalian cells, highlighting the high degree of conservation of the daf-2/insulin-like signaling pathway.