The Rho family of small GTPases, including Rho, Rac, and Cdc42, play essential roles in diverse cellular functions. The ability of Rho family GTPases to participate in signaling events is determined by the ratio of inactive (GDP-bound) and active (GTP-bound) forms in the cell. The activation of Rho family proteins requires the exchange of bound GDP for GTP, a process catalyzed by the Dbl family of guanine nucleotide exchange factors (GEFs). The GEFs have high affinity for the guanine nucleotide-free state of the GTPases and are thought to promote GDP release by stabilizing an intermediate transition state. In this study, we have identified and characterized a new Rac/Cdc42-specific Dbl family guanine nucleotide exchange factor, named GEFT. GEFT is highly expressed in the excitable tissues, including brain, heart, and muscle. Low or very little expression was detected in other nonexcitable tissues. GEFT has specific exchange activity for Rac and Cdc42 in our in vitro GTPase exchange assays and glutathione S-transferase-PAK pull-down assays with GTP-bound Rac1 and Cdc42. Overexpression of GEFT leads to changes in cell morphology and actin cytoskeleton re-organization, including the formation of membrane microspikes, filopodia, and lamilliopodia. Furthermore, expression of GEFT in NIH3T3 cells promotes foci formation, cell proliferation, and cell migration, possibly through the activation of transcriptional factors involved in cell growth and proliferation. Together, our data suggest that GEFT is a Rac/Cdc42-specific GEF protein that regulates cell morphology, cell proliferation, and transformation.