The small GTPase Arl3 is important for the enrichment of lipidated proteins to primary cilia, including the outer segment of photoreceptors. Human mutations in the small GTPase Arl3 cause both autosomal recessive and dominant inherited retinal dystrophies. We discovered that dominant mutations result in increased active G-protein—Arl3-D67V has constitutive activity and Arl3-Y90C is fast cycling—and their expression in mouse rods resulted in a displaced nuclear phenotype due to an aberrant Arl3-GTP gradient. Using multiple strategies, we go on to show that removing or restoring the Arl3-GTP gradient within the cilium is sufficient to rescue the nuclear migration defect. Together, our results reveal that an Arl3 ciliary gradient is involved in proper positioning of photoreceptor nuclei during retinal development.