We have identified a new guanine-nucleotide exchange factor, P-Rex2, and cloned it from human skeletal muscle and brain libraries. It has widespread tissue distribution but is not expressed in neutrophils. P-Rex2 is a 183 kDa protein that activates the small GTPase Rac and is regulated by phosphatidylinositol (3,4,5)-trisphosphate and the beta gamma subunits of heterotrimeric G proteins in vitro and in vivo. P-Rex2 has structure, activity and regulatory properties similar to P-Rex1 but has divergent tissue distribution, as P-Rex1 is mainly expressed in neutrophils. Together, they form an enzyme family capable of mediating Rac signalling downstream of G protein-coupled receptors and phosphoinositide 3-kinase.