Net1 is a guanine nucleotide exchange factor specific for the small GTPase Rho. Oncogenic activation of Net1 occurs by truncation of the N-terminal part of the protein, which functions as a negative regulatory domain. Here, we have investigated the mechanism of Net1 regulation via its N terminus. We find that Net1 localizes to the nucleus, whereas oncogenic Net1 is found in the cytoplasm. Nuclear import of Net1 is mediated by two nuclear localization signals present in the N terminus of the protein, and forced cytoplasmic localization of Net1 is sufficient to activate Rho. In addition, the pleckstrin homology (PH) domain of Net1 acts as a nuclear export signal. Because an amino acid substitution in the PH domain that inhibits guanine nucleotide exchange factor activity does not inhibit nuclear export, we conclude that this PH domain has at least two functions. Together, our results suggest that Net1 can shuttle in and out of the nucleus, and that activation of Rho by Net1 is controlled by changes in its subcellular localization.