USP16/UBP-M has emerged as a histone H2AK119 deubiquitinase (DUB) implicated in the regulation of chromatin-associated processes and cell cycle progression. Despite this, available evidence suggests that this DUB is also observed in the cytoplasm. How the nucleo-cytoplasmic transport of USP16, and hence its function, is regulated has remained elusive. Here we show that USP16 is predominantly cytoplasmic in all cell cycle phases. We identified the nuclear export signal (NES) responsible for maintaining USP16 in the cytoplasm. We found that USP16 is only transiently retained in the nucleus following mitosis and then rapidly exported from this compartment. We also defined a non-canonical nuclear localization signal (NLS) sequence that plays a minimal role in directing USP16 into the nucleus. We further established that this DUB does not accumulate in the nucleus following DNA damage. Instead, only enforced nuclear localization of USP16 abolishes DNA double strand break (DSB) repair, possibly due to unrestrained DUB activity. Thus, in contrast to the prevailing view, our data indicate that USP16 is actively excluded from the nucleus and that this DUB might indirectly regulate DSB repair.