The phosphatase Cdc14 is required for mitotic exit in budding yeast. Cdc14 promotes Cdk1 inactivation by targeting proteins that, when dephosphorylated, trigger degradation of mitotic cyclins and accumulation of the Cdk1 inhibitor, Sic1. Cdc14 is sequestered in the nucleolus during most of the cell cycle but is released into the nucleus and cytoplasm during anaphase. When Cdc14 is not properly sequestered in the nucleolus, expression of the S-phase cyclin Clb5 is required for viability, suggesting that the antagonizing activity of Clb5-dependent Cdk1 specifically is necessary when Cdc14 is delocalized. We show that delocalization of Cdc14 combined with loss of Clb5 causes defects in DNA replication. When Cdc14 is not sequestered, it efficiently dephosphorylates a subset of Cdk1 substrates including the replication factors, Sld2 and Dpb2. Mutations causing Cdc14 mislocalization interact genetically with mutations affecting the function of DNA polymerase ɛ and the S-phase checkpoint protein Mec1. Our findings suggest that Cdc14 is retained in the nucleolus to support a favorable kinase/phosphatase balance while cells are replicating their DNA, in addition to the established role of Cdc14 sequestration in coordinating nuclear segregation with mitotic exit.