NADPH-dependent superoxide generation can be reconstituted in a cell-free system using recombinant cytosolic factors (p47-phox, p67-phox, and Rac) plus flavocytochrome b558. Rac1 and Rac2 are closely related small GTPases, differing primarily in the C-terminal 10 residues where Rac1 but not Rac2 contains a polybasic sequence. In their nonisoprenylated forms, Rac1 was highly effective in reconstituting NADPH oxidase activity (low EC50, high Vmax), whereas Rac2 was only minimally effective (high EC50, low Vmax). In contrast, low concentrations of isoprenylated Rac1 and Rac2 both supported high rates of superoxide generation. Like full length Rac2, truncated forms of both Rac1 and Rac2 in which the C-terminal 10 residues were eliminated were poorly activating, pointing to the C terminus of Rac1 as a determinant of activity. Mutation of single positively charged residues in the C terminus of nonisoprenylated Rac1 markedly reduced its ability to support superoxide generation, affecting both its EC50 and the Vmax. In contrast, mutation or truncation of the C terminus failed to affect the activation of PAK, a Rac-regulated protein kinase. The EC50 for Rac1 increased with increasing salt concentrations, whereas that of Rac2 was independent of salt, implicating the involvement of electrostatic forces for the former. Using flavocytochrome b558 reconstituted into phosphatidylcholine vesicles, the EC50 for Rac1 but not Rac2 decreased (increased binding) when an acidic phospholipid (phosphatidylinositol) was present, supporting a role for the Rac1 polybasic C terminus in binding to the membrane. A model in which Rac must associate simultaneously both with p67-phox and with the membrane to activate the NADPH oxidase can account for the above observations.