NUC-1, a basic helix-loop-helix zipper protein, activates the expression of several genes involved in phosphorus acquisition in Neurospora crassa. In the present study we investigated whether posttranscriptional mechanisms control the activity of NUC-1. The NUC-1 level was higher (up to fivefold) in wild-type cells grown at low external phosphate concentration and in mutant strains expressing the phosphorus acquisition genes constitutively than in a wild-type strain grown at high external phosphate concentration. Using indirect immunofluorescence we demonstrated that NUC-1 is localized at least predominantly in the cytosol when wild-type N. crassa is grown with an adequate supply of phosphate, whereas NUC-1 is largely concentrated in the nucleus upon limitation of external phosphate. In mutant strains expressing the phosphorus acquisition genes constitutively, NUC-1 localization was also primarily in the nucleus. Thus, subcellular compartmentation of regulatory proteins is an important mechanism in regulating gene expression in filamentous fungi.