The nucleus-localized C2 protein of Tomato yellow leaf curl virus-China (TYLCV-C) is an active suppressor of posttranscriptional gene silencing (PTGS). Consistently, infection with TYLCV-C resulted in PTGS arrest in plants. The C2 protein possesses a functional, arginine-rich nuclear localization signal within the basic amino acid-rich region (17)KVQHRIAKKTTRRRR(31). When expressed from potato virus X, C2-RRRR(31)DVGG (in which the four consecutive arginine residues (28)RRRR(31) were replaced with DVGG) that had been tagged with a green fluorescent protein (GFP) failed to transport GFP into nuclei and was dysfunctional in inducing necrosis and suppressing PTGS in plants. Amino acid substitution mutants C2-K(17)D-GFP, C2-HR(21)DV-GFP, and C2-KK(25)DI-GFP localized to nuclei and produced necrosis, but only C2-K(17)D-GFP suppressed PTGS. The N-terminal portions C2(1-31) and C2(17-31) fused in frame to GFP were capable of targeting GFP to nuclei, but neither caused necrosis nor affected PTGS. Our data establish that nuclear localization is likely required for C2 protein to function in C2-mediated induction of necrosis and suppression of PTGS, which may follow diverse pathways in plants. Possible mechanisms of how the C2 protein involves these biological functions are discussed.