The KinI kinesin MCAK is a microtubule depolymerase important for governing spindle microtubule dynamics during chromosome segregation. The dynamic nature of spindle assembly and chromosome-microtubule interactions suggest that mechanisms must exist that modulate the activity of MCAK, both spatially and temporally. In Xenopus extracts, MCAK associates with and is stimulated by the inner centromere protein ICIS. The inner centromere kinase Aurora B also interacts with ICIS and MCAK raising the possibility that Aurora B may regulate MCAK activity as well. Herein, we demonstrate that recombinant Aurora B-INCENP inhibits Xenopus MCAK activity in vitro in a phosphorylation-dependent manner. Substituting endogenous MCAK in Xenopus extracts with the alanine mutant XMCAK-4A, which is resistant to inhibition by Aurora B-INCENP, led to assembly of mono-astral and monopolar structures instead of bipolar spindles. The size of these structures and extent of tubulin polymerization in XMCAK-4A extracts indicate that XM-CAK-4A is not defective for microtubule dynamics regulation throughout the cytoplasm. We further demonstrate that the ability of XMCAK-4A to localize to inner centromeres is abolished. Our results show that MCAK regulation of cytoplasmic and spindle-associated microtubules can be differentiated by Aurora B-dependent phosphorylation, and they further demonstrate that this regulation is required for bipolar meiotic spindle assembly.