Diacylglycerol kinases (DGKs) terminate signalling from diacylglycerol by converting it to phosphatidic acid. Diacylglycerol regulates cell growth and differentiation, and its transient accumulation in the nucleus may be particularly important in this regulation. Here we show that a fraction of DGK-zeta is found in the nucleus, where it regulates the amount of nuclear diacylglycerol. Reducing nuclear diacylglycerol levels by conditional expression of DGK-zeta attenuates cell growth. The nuclear-localization signal of DGK-zeta is located in a region that is homologous to the phosphorylation-site domain of the MARCKS protein. This is, to our knowledge, the first evidence that this domain, which is a major target for protein kinase C, can localize a protein to the nucleus. Two isoforms of protein kinase C, but not others, regulate the localization of DGK-zeta. Our results define a cycle in which diacylglycerol activates protein kinase C, which then regulates the metabolism of diacylglycerol by alternating the intracellular location of DGK-zeta. This may be a general mechanism to control mitogenic signals that depend on nuclear diacylglycerol.