The Ras-related small GTP-binding proteins are involved in diverse cellular events, including cell signaling, proliferation, cytoskeletal organization, and secretion. The interconversion of the active, GTP-bound form of the protein to the inactive, GDP-bound form is influenced by two types of regulatory proteins, those that alter the intrinsic GTPase activity of the GTP-binding protein and those that affect the rate of GDP/GTP exchange. By utilizing a subtractive hybridization approach, we have isolated a human gene encoding Ly-GDI, a protein that has striking homology to the product of a previously cloned gene, Rho-GDI, which inhibits GDP/GTP exchange on the Rho family of GTPases. In contrast to Rho-GDI, which is ubiquitously expressed, Ly-GDI is expressed only in hematopoietic tissues and predominantly in B- and T-lymphocyte cell lines. The full-length Ly-GDI cDNA encodes a 27-kDa protein which binds to RhoA and inhibits GDP dissociation from RhoA. Stimulation of T lymphocytes with phorbol ester leads to phosphorylation of Ly-GDI, suggesting an involvement of Ly-GDI in lymphocyte activation pathways. Cell type-specific regulators of the Ras-like GTP-binding proteins may provide one mechanism by which different cell types respond uniquely to signals transduced through the same cell surface receptor or may provide a way by which the GTP-binding proteins can be uniquely engaged by tissue-restricted receptors.