ARNO is a member of a family of guanine nucleotide exchange factors that activate small GTPases called ADP-ribosylation factors (ARFs) [1] [2] [3], which regulate vesicular trafficking and, in one case (ARF6), also regulate cortical actin structure [4]. ARNO is located at the plasma membrane, and in the presence of activated protein kinase C (PKC) can induce cortical actin rearrangements reminiscent of those produced by active ARF6 [5] [6] [7] [8]. High-affinity binding of ARNO to membranes, which is required for exchange activity, is mediated cooperatively by a pleckstrin homology (PH) domain and an adjacent carboxy-terminal polybasic domain [3] [9]. ARNO is phosphorylated in vivo by PKC on a single serine residue, S392, located within the carboxy-terminal polybasic domain. Mutation of S392 to alanine does not prevent ARNO-mediated actin rearrangements, suggesting that phosphorylation does not lead to ARNO activation [6]. Here, we report that phosphorylation negatively regulates ARNO exchange activity through a 'PH domain electrostatic switch'. Introduction of a negatively charged phosphate into the polybasic domain reduced interaction of ARNO with membranes both in vitro and in vivo, and inhibited exchange in vitro. This regulated membrane association is similar to the myristoyl electrostatic switch that controls membrane binding of the myristoylated alanine-rich C kinase substrate (MARCKS) [10], but to our knowledge is the first demonstration of an electrostatic switch regulating the membrane interaction of a protein containing a PH domain. This mechanism allows regulation of ARNO lipid binding and exchange activity at two levels, phosphoinositide-dependent recruitment and PKC-dependent displacement from the membrane.