The adenosine deaminases that act on RNA (ADARs) catalyze the site-specific conversion of adenosine to inosine (A to I) in primary mRNA transcripts, thereby affecting the splicing pattern or coding potential of mature mRNAs. Although the subnuclear localization of A-to-I editing has not been precisely defined, ADARs have been shown to act before splicing, suggesting that they function near nucleoplasmic sites of transcription. Here we demonstrate that ADAR2, a member of the vertebrate ADAR family, is concentrated in the nucleolus, a subnuclear domain disparate from the sites of mRNA transcription. Selective inhibition of ribosomal RNA synthesis or the introduction of mutations in the double-stranded RNAbinding domains within ADAR2 results in translocation of the protein to the nucleoplasm, suggesting that nucleolar association of ADAR2 depends on its ability to bind to ribosomal RNA. Fluorescence recovery after photobleaching reveals that ADAR2 can shuttle rapidly between subnuclear compartments. Enhanced translocation of endogenous ADAR2 from the nucleolus to the nucleoplasm results in increased editing of endogenous ADAR2 substrates. These observations indicate that the nucleolar localization of ADAR2 represents an important mechanism by which RNA editing can be modulated by the sequestration of enzymatic activity from potential RNA substrates in the nucleoplasm.T he conversion of adenosine to inosine (A to I) by RNA editing was first observed in yeast tRNAs (1) but has since been identified in numerous viral and cellular mRNA transcripts (2-4). A-to-I editing is most often identified as an adenosineto-guanosine (A-to-G) discrepancy between genomic and cDNA sequences due to the similar base-pairing properties of inosine and guanosine during cDNA synthesis. A-to-I conversion is catalyzed via hydrolytic deamination at the C6 position of the adenine ring (5) and requires an extended region of doublestranded RNA (dsRNA) in potential RNA substrates formed by intramolecular base-pairing interactions between exon and intron sequences (2-4). A family of adenosine deaminases that act on RNA (ADARs) have been extensively characterized and are responsible for catalyzing the site-specific A-to-I conversion observed in cellular mRNA transcripts (6-8). ADAR-mediated RNA editing events can change the amino acid coding potential of genomically encoded transcripts to produce protein products with altered functional properties (2, 3). For example, the editing of RNAs encoding mammalian ionotropic glutamate receptor (GluR) subunits can lead to the production of heteromeric glutamate-gated channels with altered ion permeation and agonist-induced desensitization kinetics (9-11), whereas the editing of transcripts encoding the 2C-subtype of serotonin receptor (5-HT 2C R) can generate receptor isoforms that couple to heterotrimeric G proteins with decreased efficiency (12-14). A-to-I editing events have also been described in nontranslated RNA species and noncoding regions of mRNA transcripts (15)(16)(17), suggesting that such modif...