BACKGROUND: Annexin II heavy chain (also called p36, calpactin I) is lost in prostate cancers and in a majority of prostate intraepithelial neoplasia (PIN). Loss of annexin II heavy chain appears to be specific for prostate cancer since overexpression of annexin II is observed in a majority of human cancers, including pancreatic cancer, breast cancer and brain tumors. Annexin II exists as a heterotetramer in complex with a protein ligand p11 (S100A10), and as a monomer. Diverse cellular functions are proposed for the two forms of annexin II. The monomer is involved in DNA synthesis. A leucine-rich nuclear export signal (NES) in the N-terminus of annexin II regulates its nuclear export by the CRM1-mediated nuclear export pathway. Mutation of the NES sequence results in nuclear retention of annexin II. RESULTS: Annexin II localized in the nucleus is phosphorylated, and the appearance of nuclear phosphorylated annexin II is cell cycle dependent, indicating that phosphorylation may play a role in nuclear entry, retention or export of annexin II. By exogenous expression of annexin II in the annexin II-null LNCaP cells, we show that wild-type annexin II is excluded from the nucleus, whereas the NES mutant annexin II localizes in both the nucleus and cytoplasm. Nuclear retention of annexin II results in reduced cell proliferation and increased doubling time of cells. Expression of annexin II, both wild type and NES mutant, causes morphological changes of the cells. By site-specific substitution of glutamic acid in the place of serines 11 and 25 in the N-terminus, we show that simultaneous phosphorylation of both serines 11 and 25, but not either one alone, prevents nuclear localization of annexin II. CONCLUSION: Our data show that nuclear annexin II is phosphorylated in a cell cycle-dependent manner and that substitution of serines 11 and 25 inhibit nuclear entry of annexin II. Aberrant accumulation of nuclear annexin II retards proliferation of LNCaP cells.