Exit from mitosis in budding yeast requires a group of essential proteins--including the GTPase Tem1 and the protein phosphatase Cdc14--that downregulate cyclin-dependent kinase activity. We identified a mutation, net1-1, that bypasses the lethality of tem1 delta. NET1 encodes a novel protein, and mass spectrometric analysis reveals that it is a key component of a multifunctional complex, denoted RENT (for regulator of nucleolar silencing and telophase), that also contains Cdc14 and the silencing regulator Sir2. From G1 through anaphase, RENT localizes to the nucleolus, and Cdc14 activity is inhibited by Net1. In late anaphase, Cdc14 dissociates from RENT, disperses throughout the cell in a Tem1-dependent manner, and ultimately triggers mitotic exit. Nucleolar sequestration may be a general mechanism for the regulation of diverse biological processes.