A method and system for using location of a cellular wireless communication device (WCD) as a basis to restrict application of a cellular-PBX integration service. In one embodiment, a radio access network (RAN) serving the WCD receives a call request for the WCD, and, based on the WCD's location, a determination is made as to whether the call should be set up to an IP PBX server that serves the WCD, to allow the IP PBX server to handle the call. In another embodiment, an IP PBX server serving a WCD receives a call request and responsively signals to a call session control function (CSCF), and the CSCF or a policy server decides based on the WCD's location whether the call should be set up to the RAN that serves the WCD, to allow the RAN to handle the call.