Tumorhead (TH) regulates neural plate cell proliferation during Xenopus early development, and gain or loss of function prevents neural differentiation. TH shuttles between the nuclear and cytoplasmic/cortical cell compartments in embryonic cells. In this study, we show that subcellular distribution of TH is important for its functions. Targeting TH to the cell cortex/membrane potentiates a TH gain of function phenotype and results in neural plate expansion and inhibition of neuronal differentiation. We have found that TH subcellular localization is regulated, and that its shuttling between the nucleus and the cell cortex/cytoplasm is controlled by the catalytic activity of p21-activated kinase, X-PAK1. The phenotypes of embryos that lack, or have excess, X-PAK1 activity mimic the phenotypes induced by loss or gain of TH functions, respectively. We provide evidence that X-PAK1 is an upstream regulator of TH and discuss potential functions of TH at the cell cortex/cytoplasmic membrane and in the nucleus.