The Rho family of small GTP-binding proteins plays important roles in the regulation of actin cytoskeleton organization and cell growth. Activation of these GTPases involves the replacement of bound GDP with GTP, a process catalyzed by the Dbl-like guanine-nucleotide exchange factors, all of which seem to share a putative catalytic motif termed the Dbl homology (DH) domain, followed by a pleckstrin homology (PH) domain. Here we have examined the role of a Dbl-like molecule, the faciogenital dysplasia gene product (FGD1), which when mutated in its Dbl homology domain, cosegregates with the developmental disease Aarskog-Scott syndrome. We report that a polypeptide of FGD1 encompassing the DH and PH domains can bind specifically to the Rho family GTPase Cdc42Hs and stimulates the GDP-GTP exchange of the isoprenylated form of Cdc42Hs. Microinjection of this FGD1 polypeptide into Swiss 3T3 fibroblast cells induces the formation of peripheral actin microspikes, similar to that previously observed when cells were injected with a constitutively active form of Cdc42Hs. This effect of FGD1 on actin organization is readily inhibited by coinjection of a dominant-negative mutant of Cdc42Hs. Examination of NIH 3T3 cells expressing the FGD1 fragment revealed that similar to cells expressing Dbl, two independent elements downstream of Cdc42Hs, the Jun NH 2 -terminal kinase and the p70 S6 kinase, became activated. Hence, our results indicate that FGD1, through its DH and PH domains, acts as a Cdc42Hs-specific guanine-nucleotide exchange factor and suggest that the Cdc42Hs GTPase may have a role in mammalian development.The Rho family of small GTP-binding proteins have been implicated in multiple signaling pathways leading to cytoskeleton reorganization (1) and cell growth (2). RhoA has been shown to be involved in actin stress fiber and focal adhesion formation (3); Rac1 is required for membrane ruffling and lamellipodia formation induced by growth factors (4); and Cdc42Hs has been demonstrated to mediate the induction of peripheral actin microspikes (PAM) 1 and filopodia by bradykinin (5). In fibroblast cells, Cdc42Hs/Rac1/RhoA have been suggested to work in a hierarchical cascade mediating these changes in the actin cytoskeleton (6). In addition, Rho, Rac, and Cdc42Hs all seem to be involved in the transcriptional regulation by serum response factor (7) and in the regulation of cell cycle progression (8). Particularly, Cdc42Hs and Rac participate in the p21-activated kinase-mediated Jun N-terminal kinase (JNK) activation (9, 10) and, through an independent pathway, in the regulation of p70 S6 kinase (S6K) (11).The activation of Rho proteins requires the exchange of bound GDP for GTP (12), a process catalyzed by a growing family of guanine-nucleotide exchange factors (GEFs) for which the Dbl oncoprotein is a prototype (13). These putative GEFs share the structural arrangement of an ϳ200-amino acid motif, the Dbl homology (DH) domain, followed by a second putative signaling motif, the pleckstrin homology (PH) domain (13). The ...