Dbs is a Rho-specific guanine nucleotide exchange factor that was identified in a screen for proteins whose overexpression cause deregulated growth in murine fibroblasts. Dbs contains multiple recognizable motifs including a centrally located Rho-specific guanine nucleotide exchange factor domain, a COOH-terminal Src homology 3 domain, two spectrin-like repeats, and a recently identified NH(2)-terminal Sec14 homology domain. The transforming potential of Dbs is substantially activated by the removal of inhibitory sequences that lie outside of the core catalytic sequences, and in this current study we mapped this inhibition to the Sec14 domain. Surprisingly removal of the NH(2) terminus did not alter the catalytic activity of Dbs in vivo but rather altered its subcellular distribution. Whereas full-length Dbs was distributed primarily in a perinuclear structure that coincides with a marker for the Golgi apparatus, removal of the Sec14 domain was associated with translocation of Dbs to the cell periphery where it accumulated within membrane ruffles and lamellipodia. However, translocation of Dbs and the concomitant changes in the actin cytoskeleton were not sufficient to fully activate Dbs transformation. The Sec14 domain also forms intramolecular contacts with the pleckstrin homology domain, and these contacts must also be relieved to achieve full transforming activity. Collectively these observations suggest that the Sec14 domain regulates Dbs transformation through at least two distinct mechanisms, neither of which appears to directly influence the in vivo exchange activity of the protein.