Rac small GTPases and their GEFs of the DOCK family are pivotal checkpoints in development, autoimmunity and bone homeostasis, and their abnormal regulation is associated to diverse pathologies. Small molecules that inhibit their activities are therefore needed to investigate their functions. Here, we characterized the mechanism of inhibition of human DOCK5 by C21, a small molecule that inhibits mouse Dock5 in cells and blocks bone degradation in mice models of osteoporosis. We showed that the catalytic DHR2 domain of DOCK5 has a high basal GEF activity in the absence of membranes which is not regulated by a simple feedback loop. C21 blocks this activity in a non-competitive manner and is specific for DOCK5. In contrast, another Dock inhibitor, CPYPP, inhibits both DOCK5 and an unrelated GEF, Trio. To gain insight into structural features of the inhibitory mechanism of C21, we used SAXS analysis of DOCK5DHR2 and crystallographic analysis of unbound Rac1-GDP. Together, these data suggest that C21 takes advantage of intramolecular dynamics of DOCK5 and Rac1 to remodel the complex into an unproductive conformation. Based on this allosteric mechanism, we propose that diversion of intramolecular dynamics is a potent mechanism for the inhibition of multidomain regulators of small GTPases.