Summary Cdc55, a regulatory B-subunit of protein phosphatase 2A (PP2A) complex, is essential for the spindle assembly checkpoint (SAC) in budding yeast, but the regulation and molecular targets of PP2A-Cdc55 have not been clearly defined or are controversial. Here, we show that an important target of Cdc55 in the SAC is the anaphase-promoting complex (APC) coupled with Cdc20 and that APC-Cdc20 is kept inactive by dephosphorylation by nuclear PP2A-Cdc55 when spindle is damaged. By isolating a new class of Cdc55 mutants specifically defective in the SAC and by artificially manipulating nucleocytoplasmic distribution of Cdc55, we further show that nuclear Cdc55 is essential for the SAC. Because the Cdc55-binding proteins Zds1 and Zds2 inhibit both nuclear accumulation of Cdc55 and SAC activity, we propose that spatial control of PP2A by Zds1 family proteins is important for tight control of SAC and mitotic progression.