Mutations in the DAX-1 [dosage-sensitive sex reversal-adrenal hypoplasia congenita (AHC) critical region on the X chromosome; NR0B1] gene cause X-linked AHC associated with hypogonadotropic hypogonadism. DAX-1 encodes an unusual orphan member of the nuclear hormone receptor superfamily, acting as a transcriptional repressor of genes involved in the steroidogenic pathway. All DAX-1 mutations found in AHC patients alter the protein C terminus, which shares similarity to the ligand binding domain of nuclear hormone receptors and bears transcriptional repressor activity. This property is invariably impaired in DAX-1 AHC mutants. Here we show that the localization of DAX-1 AHC mutant proteins is drastically shifted toward the cytoplasm, even if their nuclear localization signal, which resides in the N terminal of the protein, is intact. Cytoplasmic localization of DAX-1 AHC mutants correlates with an impairment in their transcriptional repression activity. These results reveal a critical role of an intact C terminus in determining DAX-1 subcellular localization and constitute an important example of a defect in human organogenesis caused by impaired nuclear localization of a transcription factor.