The small GTPase Rac has been implicated in a wide range of cellular processes, including the organization of the actin cytoskeleton, transcriptional control and endocytic vesicle trafficking [1-3]. The signaling components that mediate these functions downstream of Rac largely remain to be identified. In this study, we have identified synaptojanin 2, a polyphosphoinositide phosphatase as a novel Rac1 effector. Synaptojanin 2 directly and specifically interacts with Rac1 in a GTP-dependent manner. Expression of constitutively active Rac1 caused the translocation of synaptojanin 2 from the cytoplasm to the plasma membrane. Both activated Rac1 and a membrane-targeted version of synaptojanin 2 inhibited endocytosis of the epidermal growth factor (EGF) and transferrin receptors, a process that is known to be dependent on polyphosphoinositide lipids. Endocytosis of growth factor receptors is thought to play an important role in the regulation of cell proliferation. Thus, these results suggest that synaptojanin 2 may mediate the inhibitory effect of Rac1 on endocytosis and could contribute to Rac1-mediated control of cell growth.