CtBP family members, CtBP1 and CtBP2, are unique transcriptional regulators that adapt a metabolic enzyme fold, and their activities are regulated by NAD(H)-binding. CtBP1 is both cytoplasmic and nuclear, and its subcellular localization is regulated by sumoylation, phosphorylation, and binding to a PDZ protein. In contrast, we showed that CtBP2 is exclusively nuclear. CtBP1 and CtBP2 are highly similar, but differ at the N-terminal 20 amino acid region. Substitution of the N-terminal domain of CtBP1 with the corresponding CtBP2 domain confers a dominant nuclear localization pattern to CtBP1. The N-terminal domain of CtBP2 contains three Lys residues. Our results show that these Lys residues are acetylated by the nuclear acetylase p300. Although all three Lys residues of CtBP2 (Lys-6, Lys-8, and Lys-10) appear to be acetylated, acetylation of Lys-10 is critical for nuclear localization. CtBP2 with a single amino acid substitution at Lys-10 (K10R) is predominantly localized in the cytoplasm. The cytoplasmic localization of the K10R mutant is correlated with enhanced nuclear export that is inhibited by leptomycin B. Furthermore, lack of acetylation at Lys-10 renders CtBP2 to be more efficient in repression of the E-cadherin promoter. Our studies have revealed the important roles of acetylation in regulating subcellular localization and transcriptional activity of CtBP2.