Insulin-like growth factor binding protein-3 (IGFBP-3), the product of a tumor suppressor target gene, can modulate cell proliferation and apoptosis by IGF-I-dependent and IGF-I-independent mechanisms. IGFBP-3 controls the bioavailability of IGFs in the extracellular environment and is known to be subject to degradation by various extracellular proteases. Although nuclear localization and functions of IGFBP-3 have been described in the past, we show as the novel features of this study that the abundance of nuclear IGFBP-3 is directly regulated by ubiquitin/proteasome-dependent proteolysis. We show that IGFBP-3 degradation depends on an active ubiquitin-E1 ligase, specific 26S proteasome inhibitors can efficiently stabilize nuclear IGFBP-3, and the metabolic half-life of nuclear IGFBP-3 is strongly reduced relative to cytoplasmic IGFBP-3. Nuclear IGFBP-3 is highly polyubiquitinated at multiple lysine residues in its conserved COOH-terminal domain and stabilized through mutation of two COOH-terminal lysine residues. Moreover, we show that IGFBP-3, if ectopically expressed in the nucleus, can induce apoptotic cell death. These results suggest that ubiquitin/proteasome-mediated proteolysis of IGFBP-3 may contribute to down-regulation of apoptosis.