The enzyme activation-induced deaminase (AID) triggers antibody diversification in B cells by catalyzing deamination and consequently mutation of immunoglobulin genes. To minimize off-target deamination, AID is restrained by several regulatory mechanisms including nuclear exclusion, thought to be mediated exclusively by active nuclear export. Here we identify two other mechanisms involved in controlling AID subcellular localization. AID is unable to passively diffuse into the nucleus, despite its small size, and its nuclear entry requires active import mediated by a conformational nuclear localization signal. We also identify in its C terminus a determinant for AID cytoplasmic retention, which hampers diffusion to the nucleus, competes with nuclear import and is crucial for maintaining the predominantly cytoplasmic localization of AID in steady-state conditions. Blocking nuclear import alters the balance between these processes in favor of cytoplasmic retention, resulting in reduced isotype class switching.