The Rho GTPase family of intracellular molecular switches control multiple cellular functions via the regulation of the actin cytoskeleton. Increasing evidence implicates a critical involvement of these molecules in the nervous system, particularly during neuronal migration and polarity, axon and growth cone guidance, dendritic arborization and synaptic formation. However, the molecules regulating Rho GTPase activities in the nervous system are less known. Here, we present the cloning of rat ARHGAP4, a member of the Rho GTPase activating protein family, and also demonstrate its close linkage to the vasopressin 2 receptor gene. In vitro, recombinant ARHGAP4 stimulated the GTPase activity of three members of Rho GTPases, Rac1, Cdc42 and RhoA. ARHGAP4 mRNA expression was observed in multiple tissues with marked expression throughout the developing and adult nervous systems. On closer analysis of protein levels, ARHGAP4 was significantly restricted to specific regions in the nervous system. These included the stratum lucidem in the CA3 area of the hippocampus, neuronal fibers in the ventral region of the brainstem and striatum, and in the cerebellar granule cells. Subcellularly, endogenous ARHGAP4 expression localized to the Golgi complex and could redistribute to the microtubules, for example during mitosis. In addition, distinct protein expression was observed in the tips of differentiating neurites of PC12 cells. Collectively, these results demonstrate that ARHGAP4 is more widely expressed than previously thought but potentially possesses specialized activity in regulating members of the Rho GTPase family in specific cellular compartments of the nervous system.