MAP kinase phosphatase (MKP)-3 is a cytoplasmic dual specificity protein phosphatase that specifically binds to and inactivates the ERK1/2 MAP kinases in mammalian cells. However, the molecular basis of the cytoplasmic localization of MKP-3 or its physiological significance is unknown. We have used MKP-3-green fluorescent protein fusions in conjunction with leptomycin B to show that the cytoplasmic localization of MKP-3 is mediated by a chromosome region maintenance-1 (CRM1)-dependent nuclear export pathway. Furthermore, the nuclear translocation of MKP-3 seen in the presence of leptomycin B is mediated by an active process, indicating that MKP-3 shuttles between the nucleus and cytoplasm. The amino-terminal noncatalytic domain of MKP-3 is both necessary and sufficient for nuclear export of the phosphatase and contains a single functional leucine-rich nuclear export signal (NES). Even though this domain of the protein also mediates the binding of MKP-3 to MAP kinase, we show that mutations of the kinase interaction motif which abrogate ERK2 binding do not affect MKP-3 localization. Conversely, mutation of the NES does not affect either the binding or phosphatase activity of MKP-3 toward ERK2, indicating that the kinase interaction motif and NES function independently. Finally, we demonstrate that the ability of MKP-3 to cause the cytoplasmic retention of ERK2 requires both a functional kinase interaction motif and NES. We conclude that in addition to its established function in the regulated dephosphorylation and inactivation of MAP kinase, MKP-3 may also play a role in determining the subcellular localization of its substrate. Our results reinforce the idea that regulatory proteins such as MKP-3 may play a key role in the spatio-temporal regulation of MAP kinase activity.