Circadian clocks regulate ∼24-h oscillations in gene expression, behavior, and physiology. While the genetic and molecular mechanisms of circadian rhythms are well characterized, what remains poorly understood are the intracellular dynamics of circadian clock components and how they affect circadian rhythms. Here, we elucidate how spatiotemporal organization and dynamics of core clock proteins and genes affect circadian rhythms in Drosophila clock neurons. Using high-resolution imaging and DNA-fluorescence in situ hybridization techniques, we demonstrate that Drosophila clock proteins (PERIOD and CLOCK) are organized into a few discrete foci at the nuclear envelope during the circadian repression phase and play an important role in the subnuclear localization of core clock genes to control circadian rhythms. Specifically, we show that core clock genes, period and timeless, are positioned close to the nuclear periphery by the PERIOD protein specifically during the repression phase, suggesting that subnuclear localization of core clock genes might play a key role in their rhythmic gene expression. Finally, we show that loss of Lamin B receptor, a nuclear envelope protein, leads to disruption of PER foci and per gene peripheral localization and results in circadian rhythm defects. These results demonstrate that clock proteins play a hitherto unexpected role in the subnuclear reorganization of core clock genes to control circadian rhythms, revealing how clocks function at the subcellular level. Our results further suggest that clock protein foci might regulate dynamic clustering and spatial reorganization of clock-regulated genes over the repression phase to control circadian rhythms in behavior and physiology.