Vav2, like all Dbl family proteins, possesses tandem Dbl homology (DH) and pleckstrin homology (PH) domains and functions as a guanine nucleotide exchange factor for Rho family GTPases. Whereas the PH domain is a critical positive regulator of DH domain function for a majority of Dbl family proteins, the PH domains of the related Vav and Vav3 proteins are dispensable for DH domain activity. Instead, Vav proteins contain a cysteine-rich domain (CRD) critical for DH domain function. We evaluated the contribution of the PH domain and the CRD to Vav2 guanine nucleotide exchange, signaling, and transforming activity. Unexpectedly, we found that mutations of the PH domain impaired Vav2 signaling, transforming activity, and membrane association. However, these mutations do not influence exchange activity on Rac and only slightly affect exchange on RhoA and Cdc42. We also found that the CRD was critical for the exchange activity in vitro and contributed to Vav2 membrane localization. Finally, we found that phosphoinositol 3-kinase activation synergistically enhanced Vav2 transforming and signaling activity by stimulating exchange activity but not membrane association. In conclusion, the PH domain and CRD are mechanistically distinct, positive modulators of Vav2 DH domain function in vivo.