Kaiso is a BTB/POZ zinc finger protein originally described as an interaction partner of p120ctn. In cultured cell lines, Kaiso is found almost exclusively in the nucleus, where it generally acts as a transcriptional repressor. Here, we describe the first in situ immunolocalization studies of Kaiso expression in normal and cancerous tissues. Surprisingly, we found striking differences between its behavior in monolayers of different cell lines, three-dimensional cell culture systems, and in vivo. Although nuclear localization was sometimes observed in tissues, Kaiso was more often found in the cytoplasm, and in some cell types it was absent. In general, Kaiso and p120ctn did not colocalize in the nucleus. To examine this phenomenon more carefully, tumor cells exhibiting strong nuclear Kaiso staining in vitro were injected into nude mice and grown as xenografts. The latter showed a progressive translocation of Kaiso towards the cytoplasm over time, and even complete loss of expression, especially in the center of the tumor nodules. When xenografted tumors were returned to cell culture, Kaiso was re-expressed and was once again found in the nucleus. Translocation of Kaiso to the cytoplasm and down-regulation of its levels were also observed under particular experimental conditions in vitro, such as formation of spheroids and acini. These data strongly imply an unexpected influence of the microenvironment on Kaiso expression and localization. As transcriptional repression is a nuclear event, this phenomenon is likely a crucial factor in the regulation of Kaiso function.