The FERM domain containing protein 7 gene (FRMD7) associated with the X-linked disorder idiopathic congenital nystagmus (ICN) is involved in the regulation of neurite elongation during neuronal development. Members of the Rho family of small G-proteins (Rho GTPases) are key regulators of the actin cytoskeleton and are implicated in the control of neuronal morphology. The Rho GDP dissociation inhibitor alpha, RhoGDIα, the main regulator of Rho GTPases, can form a complex with the GDP-bound form of Rho GTPases and inhibit their activation. Here, we demonstrate that the full length of the mouse FRMD7, rather than the N-terminus or the C-terminus alone, directly interacts with RhoGDIα and specifically initiates Rac1 signaling in mouse neuroblastoma cell line (neuro-2a). Moreover, we show that wild-type human FRMD7 protein is able to activate Rac1 signaling by interacting with RhoGDIα and releasing Rac1 from Rac1-RhoGDIα complex. However, two missense mutations (c.781C>G and c.886G>C) of human FRMD7 proteins weaken the ability to interact with RhoGDIα and release less Rac1, that induce the activation of Rac1 to a lesser degree; while an additional mutant, c.1003C>T, which results in a C-terminal truncated protein, almost fails to interact with RhoGDIα and to activate Rac1 signaling. Collectively, these results suggest that FRMD7 interacts with one of the Rho GTPase regulators, RhoGDIα, and activates the Rho subfamily member Rac1, which regulates reorganization of actin filaments and controls neuronal outgrowth. We predict that human mutant FRMD7 thus influences Rac1 signaling activation, which can lead to abnormal neuronal outgrowth and cause the X-linked ICN.