Tissue transglutaminase is a calcium-dependent transamidating enzyme that has been postulated to play a role in the pathology of expanded CAG repeat disorders with polyglutamine expansions expressed within the affected proteins. Because intranuclear inclusions have recently been shown to be a common feature of many of these codon reiteration diseases, the nuclear localization and activity of tissue transglutaminase was examined. Subcellular fractionation of human neuroblastoma SH-SY5Y cells demonstrated that 93% of tissue transglutaminase is localized to the cytosol. Of the 7% found in the nucleus, 6% copurified with the chromatin-associated proteins, and the remaining 1% was in the nuclear matrix fraction. In situ transglutaminase activity was measured in the cytosolic and nuclear compartments of control cells, as well as cells treated with the calcium-mobilizing agent maitotoxin to increase endogenous tissue transglutaminase activity. These studies revealed that tissue transglutaminase was activated in the nucleus, a finding that was further supported by cytochemical analysis. Immunofluorescence studies revealed that nuclear proteins modified by transglutaminase exhibited a discrete punctate, as well as a diffuse staining pattern. Furthermore, different proteins were modified by transglutaminase in the nucleus compared with the cytosol. The results of these experiments clearly demonstrate localization of tissue transglutaminase in the nucleus that can be activated. These findings may have important implications in the formation of the insoluble nuclear inclusions, which are characteristic of codon reiteration diseases such as Huntington's disease and the spinocerebellar ataxias.