<p>Biological functions depend on the spatiotemporal distribution of proteins within cells. Key cellular activities such as signal transduction, metabolism, cell cycle and cell death are driven by the interactions of proteins that are localized in multiple cellular compartments. Such multilocalization can even allow protein with identical sequences to display multifunctionality, a phenomenon known as moonlighting. Despite its biological importance, the relationship between protein localization and function remains underexplored. In this Review, we discuss the known mechanisms of protein localization (including RNA transport, role of proteoforms and molecular interactions) and how subcellular localization controls protein function. Proper regulation of protein localization is crucial for specialized cell and tissue functions, including cell differentiation, polarization and the epithelial–mesenchymal transition. Protein mislocalization can also have important roles in pathological processes, such as in cancer, neurodegeneration and autoimmunity. We end with a discussion of current technological and conceptual challenges in the field of subcellular proteomics and spatial biology. Addressing these challenges will allow us to link the dynamic nature of protein localization and function across biological scales and contexts, with great impact on fundamental cell biology and clinical applications.</p>