The 26S proteasome is the multiprotein complex that degrades proteins that have been marked for destruction by the ubiquitin pathway. It is made up of two multisubunit complexes, the 20S catalytic core and the 19S regulatory complex. We describe the isolation and characterization of conditional mutants in the regulatory complex and their use to investigate interactions between different subunits. In addition we have investigated the localization of the 26S proteasome in fission yeast, by immunofluorescence in fixed cells and live cells with the use of a GFP-tagged subunit. Surprisingly, we find that in mitotic cells the 26S proteasome occupies a discrete intracellular compartment, the nuclear periphery. Electron microscopic analysis demonstrates that the complex resides inside the nuclear envelope. During meiosis the localization showed a more dynamic distribution. In meiosis I the proteasome remained around the nuclear periphery. However, during meiosis II there was a dramatic relocalization: initially, the signal occupied the area between the dividing nuclei, but at the end of mitosis the signal dispersed, returning to the nuclear periphery on ascospore formation. This observation implies that the nuclear periphery is a major site of proteolysis in yeast during mitotic growth and raises important questions about the function of the 26S proteasome in protein degradation.