Dbl family guanine nucleotide exchange factors (GEFs) are characterized by the presence of a catalytic Dbl homology domain followed invariably by a lipid-binding pleckstrin homology (PH) domain. To date, substrate recognition and specificity of this family of GEFs has been reported to be mediated exclusively via the Dbl homology domain. Here we report the novel and unexpected finding that, in the Dbl family Rac-specific GEF P-Rex2, it is the PH domain that confers substrate specificity and recognition. Moreover, the beta3beta4 loop of the PH domain of P-Rex2 is the determinant for Rac1 recognition, as substitution of the beta3beta4 loop of the PH domain of Dbs (a RhoA- and Cdc42-specific GEF) with that of P-Rex2 confers Rac1-specific binding capability to the PH domain of Dbs. The contact interface between the PH domain of P-Rex2 and Rac1 involves the switch loop and helix 3 of Rac1. Moreover, substitution of helix 3 of Cdc42 with that of Rac1 now enables the PH domain of P-Rex2 to bind this Cdc42 chimera. Despite having the ability to recognize this chimeric Cdc42, P-Rex2 is unable to catalyze nucleotide exchange on Cdc42, suggesting that recognition of substrate and catalysis are two distinct events. Thus substrate recognition can now be added to the growing list of functions that are being attributed to the PH domain of Dbl family GEFs.