Recently Oh-Thomas in [29] constructed a virtual cycle [X] vir ∈ A * (X) for a quasi-projective moduli space X of stable sheaves or complexes over a Calabi-Yau 4-fold against which DT4 invariants [5, 9] may be defined as integrals of cohomology classes. In this paper, we prove that the virtual cycle localizes to the zero locus X(σ) of an isotropic cosection σ of the obstruction sheaf ObX of X and construct a localized virtual cycle [X] vir loc ∈ A * (X(σ)). This is achieved by further localizing the Oh-Thomas class which localizes Edidin-Graham's square root Euler class of a special orthogonal bundle. When the cosection σ is surjective so that the virtual cycle vanishes, we construct a reduced virtual cycle [X] vir red . As an application, we prove DT4 vanishing results for hyperkähler 4-folds. All these results hold for virtual structure sheaves and K-theoretic DT4 invariants.