Fanconi anemia (FA) is an autosomal recessive disease characterized by genomic instability, cancer susceptibility, and cellular hypersensitivity to DNA-cross-linking agents. Eight complementation groups of FA (FA-A through FA-H) have been identified. Two FA genes, corresponding to complementation groups FA-A and FA-C, have been cloned, but the functions of the encoded FAA and FAC proteins remain unknown. We have recently demonstrated that FAA and FAC interact to form a nuclear complex. In this study, we have analyzed a series of mutant forms of the FAA protein with respect to functional activity, FAC binding, and nuclear localization. Mutation or deletion of the amino-terminal nuclear localization signal (NLS) of FAA results in loss of functional activity, loss of FAC binding, and cytoplasmic retention of FAA. Replacement of the NLS sequence with a heterologous NLS sequence, derived from the simian virus 40 T antigen, results in nuclear localization but does not rescue functional activity or FAC binding. Nuclear localization of the FAA protein is therefore necessary but not sufficient for FAA function. Mutant forms of FAA which fail to bind to FAC also fail to promote the nuclear accumulation of FAC. In addition, wild-type FAC promotes the accumulation of wild-type FAA in the nucleus. Our results suggest that FAA and FAC perform a concerted function in the cell nucleus, required for the maintenance of chromosomal stability.