Jmjd3 is required for cellular differentiation and senescence, and inhibits the induction of pluripotent stem cells by demethylating histone 3 lysine 27 trimethylation (H3K27me3). Although recent studies reveal crucial biological roles for Jmjd3, it is unclear how its demethylase activity is controlled. Here, we show that nuclear localization of Jmjd3 is required for effective demethylation of H3K27me3. Our subcellular localization analysis of Jmjd3 shows that the N-terminal region of the protein is responsible for its nuclear placement, whereas the C-terminal region harboring the catalytic Jumonji C (JmjC) domain cannot situate into the nucleus. We identify two classical nuclear localization signals (cNLSs) in the N-terminal domain of Jmjd3. Forced nuclear emplacement of the catalytic domain of Jmjd3 by fusion with a heterologous cNLS significantly enhances its H3K27me3 demethylation activity. A dynamic nucleocytoplasmic shuttling of endogenous Jmjd3 occurs in mouse embryonic fibroblasts. Jmjd3 is localized both into the cytoplasm and the nucleus, and its nuclear export is dependent on Exportin-1, as treatment with leptomycin B triggers nuclear accumulation of Jmjd3. These results suggest that the subcellular localization of Jmjd3 is dynamically regulated and has pivotal roles for H3K27me3 status.