Inositol polyphosphate 1-phosphatase, an enzyme of the phosphatidylinositol signaling pathway, hydrolyzes the 1-phosphate from inositol 1,4-bisphosphate and inositol 1,3,4-trisphosphate. We have used indirect immunofluorescence microscopy, Western blot analysis, and enzyme assays to determine the cellular localization of the enzyme. We find that the enzyme is present, but not exclusively, in the nucleus of Madin-Darby bovine kidney cells, and also in COS-7 and HeLa cells that were transiently transfected with a cDNA encoding bovine inositol polyphosphate 1-phosphatase. DNA synthesis, as measured in COS-7 and HeLa cells transiently over-expressing enzyme, was reduced 50% in cells transfected with wild-type enzyme compared with nontransfected cells or cells transfected with an inactive mutant form of the enzyme. These data demonstrate that this response is mediated by one of the substrates or products of inositol polyphosphate 1-phosphatase. We propose that overexpressed inositol polyphosphate 1-phosphatase degrades a stimulatory inositol phosphate(s) and thereby inhibits DNA synthesis.