We previously reported that G␤␥ signaling regulates cell spreading or cell shape change through activation of a Rho family small GTPase, suggesting the existence of a G␤␥-regulated Rho guanine-nucleotide exchange factor (RhoGEF). In this study we examined various RhoGEF clones, found FLJ00018 to be a G␤␥-activated RhoGEF, and investigated the molecular mechanism of G␤␥-induced activation of Rho family GTPases. Co-expression of the genes for FLJ00018 and G␤␥ enhanced serum response element-mediated gene transcription in HEK-293 cells. Combined expression of G␤␥ and FLJ00018 significantly induced activation of Rac and Cdc42 but not RhoA. FLJ00018 also enhanced gene transcription induced by carbachol-stimulated m2 muscarinic acetylcholine receptor, and this enhancement was blocked by pertussis toxin. Furthermore, we demonstrated G␤␥ to interact directly with the N-terminal region of FLJ00018 and the N-terminal fragment of this molecule to inhibit serum response element-dependent transcription induced by G␤␥/FLJ00018 and carbachol. In NIH3T3 cells, FLJ00018 enhanced lysophosphatidic acid-induced cell spreading, which was also blocked by the N-terminal fragment of FLJ00018. These results provide evidence for a signaling pathway by which G i -coupled receptor specifically induces Rac and Cdc42 activation through direct interaction of G␤␥ with FLJ00018.Rho family small GTPases belong to the Ras superfamily, comprise more than 20 distinct proteins, and control a wide variety of cellular processes. First identified as regulators of the actin cytoskeleton rearrangements, RhoA, Rac1, and Cdc42 induce stress fibers, lamellipodia, and filopodia formation, respectively, and it is now clear that Rho family proteins play pivotal roles in cell migration, outgrowth, extension and pathfinding of neuritis, and gene transcription. Like other small GTPases, Rho GTPases cycle between an inactive GDP-bound state and an active GTP-bound state (1, 2). This cycling of Rho GTPases is controlled by three distinct classes of regulatory proteins, namely (i) guanine-nucleotide dissociation inhibitors, which stabilize the inactive form (3), (ii) guanine-nucleotide exchange factors (GEFs), 2 which catalyze GDP/GTP exchange (4, 5), and (iii) GTPases-activating proteins, which stimulate low, intrinsic GTPase activity of Rho GTPases (6). In particular, 60 different GEFs for Rho family members (RhoGEFs) have been described so far (4). A common feature of RhoGEFs is the Dbl homology (DH) domain responsible for exchange activity followed by a pleckstrin homology (PH) domain considered to be involved in subcellular localization. Besides this tandem motif, RhoGEFs often contain one or more additional signal transduction domains, such as PDZ, Src homology (SH) 2, SH3, and RGS (regulator of G protein signaling), which can function as molecular bridges between different signal transduction pathways.It is well established that a large variety of G protein-coupled receptors (GPCRs), particularly those coupling to the G 12/13 type of heterotrimeric G proteins...