We consider the change in electron localization due to the presence of electron-electron repulsion in the Anderson-Hubbard model. Taking into account local Mott-Hubbard physics and static screening of the disorder potential, the system is mapped onto an effective single-particle Anderson model, which is studied within the self-consistent theory of electron localization. We find rich nonmonotonic behavior of the localization length ξ in two-dimensional systems, including an interaction-induced exponential enhancement of ξ for small and intermediate disorders although ξ remains finite. In three dimensions we identify for half filling a Mott-Hubbard-assisted Anderson localized phase existing between the metallic and the Mott-Hubbard-gapped phases. For small U there is re-entrant behavior from the Anderson localized phase to the metallic phase.