Post-translational regulation of the transcription factor CLOCK (CLK) is crucial for circadian clock function. The contribution of the hetero-dimerization partner CYCLE (CYC) to the post-translational regulation of CLK is largely unknown. Here we report that Drosophila CLK and CYC proteins not only interact in the nucleus, where they activate circadian transcription, but also in the cytoplasm of Drosophila S2R+ cells. Cytoplasmic CLK accumulates in a hypo-phosphorylated state. Impairment of CYC-binding caused a further reduction in CLK phosphorylation, while over-expression of CYC enhanced the phosphorylation of cytoplasmic CLK towards a hypo-phosphorylated state. CYC also promotes nuclear import of CLK, which is required for hyper-phosphorylation of the CLK protein. Our results indicate a role of CYC in the post-translational regulation of the CLK protein.