The telomeric repeat binding factor 2 (TRF2) specifically recognizes TTAGGG tandem repeats at chromosomal ends. Unexpectedly immunofluorescence studies revealed a prominent nucleolar localization of TRF2 in human cells, which appeared as discrete dots with sizes similar to those present in the nucleoplasm. The TRF2 dots did not overlap with dots stemming from the upstream binding factor (UBF) or the B23 protein. After treatment with a low concentration of actinomycin D (0.05 μg/ml), TRF2 remained in the nucleolus, although this condition selectively inhibited RNA polymerase I and led to a relocalization of UBF and B23. TRF2 was prominent in the nucleolus at G0 and S but seemed to diffuse out of the nucleolus in G2 phase. During mitosis TRF2 dispersed from the condensed chromosomes and returned to the nucleolus at cytokinesis. Treatment with low doses of actinomycin D delayed the release of TRF2 from the nucleolus as cells progressed from G2 phase into mitosis. With actinomycin D present TRF2 was detected in discrete foci adjacent to UBF in prophase, while in metaphase a complete overlap between TRF2 and UBF was observed. TRF2 was present in DNase-insensitive complexes of nucleolar extracts, whereas DNA degradation disrupted the protein-DNA complexes consisting of Ku antigen and B23. Following treatment with actinomycin D some of the mitotic cells displayed chromosome end-to-end fusions. This could be correlated to the actinomycin D-suppressed relocalization of TRF2 from the nucleolus to the telomeres during mitosis. These results support the view that the nucleolus may sequester TRF2 and thereby influences its telomeric functions.