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This paper proposes "Mobility/Traffic Adaptive Location Management" that dynamically assigns the Location Area (LA) in response to each terminal's mobility and traffic characteristics to reduce the location management signals over the air. The optimum LA size depends on each mobile terminal's characteristics. The terminal velocity and call arrival rate are very important factors to determine the optimum LA size. The terminal velocity is measured in the mobile terminal by using GPS (Global Positioning System). In this paper, we investigate the following subjects for realizing the proposed location management. First, we present a method of calculating the optimum LA size. Second, we present methods for dynamic LA set up. Third, we evaluate the performance of the proposed location management. Finally, we present the network architecture and general procedures of the proposed location management.