We explain the dynamics of ultracold atoms in amplitude modulated optical lattice with harmonic confinement. We show the existence of dynamical localization that manifests itself as the cold atoms exhibit quantum suppression of classical chaos in the dynamical system. The exponential localization takes place both in momentum as well as in coordinate space within certain windows on modulation amplitude. We show that inter-band transitions, taking place due to the amplitude modulation in optical lattice, play an important role in controlling the dynamical localization of matter waves. Our obtained results can be generalized to other dynamical systems and are experimentally realizable as we consider the values of parameters from the present-day available experiments.