Cytokinins regulate cell division and differentiation as well as a number of other processes implicated in plant development. The first step of cytokinin biosynthesis in Arabidopsis (Arabidopsis thaliana) is catalyzed by adenosine phosphate-isopentenyltransferases (AtIPT). The enzymes are localized in plastids or the cytoplasm where they utilize the intermediate dimethylallyl-diphosphate from the methylerythritolphosphate or mevalonic acid pathways. However, the regulatory mechanisms linking AtIPT activity and cytokinin biosynthesis with cytokinin homeostasis and isoprenoid synthesis are not well understood. Here, we demonstrate that expression of AtIPT3, one member of the adenosine AtIPT protein family in Arabidopsis, increased the production of specific isopentenyl-type cytokinins. Moreover, AtIPT3 is a substrate of the protein farnesyl transferase, and AtIPT3 farnesylation directed the localization of the protein in the nucleus/cytoplasm, whereas the nonfarnesylated protein was located in the plastids. AtIPT3 gain-of-function mutant analysis indicated that the different subcellular localization of the farnesylated protein and the nonfarnesylated protein was closely correlated with either isopentenyl-type or zeatin-type cytokinin biosynthesis. In addition, mutation of the farnesyl acceptor cysteine-333 of AtIPT3 abolishes cytokinin production, suggesting that cysteine-333 has a dual and essential role for AtIPT3 farnesylation and catalytic activity.