The Ras family of small GTPases function in a wide variety of biological processes as "molecular switches" by cycling between inactive GDP-bound and active GTP-bound forms. Di-Ras1 and Di-Ras2 were originally identified as small GTPases forming a distinct subgroup of the Ras family. Di-Ras1/Di-Ras2 mRNAs are detected predominantly in brain and heart tissues. Biochemical analysis of Di-Ras1/Di-Ras2 has revealed that they have little GTPase activity and that their intrinsic guanine-nucleotide exchange rates are much faster than that of H-Ras. Yet little is known about the biological role(s) of Di-Ras1/Di-Ras2 or of how their activities are regulated. In the present study we found that endogenous Di-Ras2 co-purifies with SmgGDS from rat brain cytosol. Size-exclusion chromatography of purified recombinant proteins showed that Di-Ras2 forms a high affinity complex with SmgGDS. SmgGDS is a guanine nucleotide exchange factor with multiple armadillo repeats and has recently been shown to specifically activate RhoA and RhoC. In contrast to the effect on RhoA, SmgGDS does not act as a guanine nucleotide exchange factor for Di-Ras2 but instead tightly associates with Di-Ras2 to reduce its binding affinity for guanine nucleotides. Finally, pulse-chase analysis revealed that Di-Ras2 binds, in a C-terminal CAAX motif-dependent manner, to SmgGDS immediately after its synthesis. This leads to increased Di-Ras2 stability. We thus propose that isoprenylated Di-Ras2 forms a tight complex with SmgGDS in cytosol immediately after its synthesis, which lowers its affinity for guanine nucleotides.