IQGAP1 is a multi-domained protein that integrates signaling of the Rho family GTPase Cdc42 with regulation of the cytoskeleton. Using SPOT analysis and in vitro peptide competition assays we have identified a 24 amino acid region of IQGAP1 that is necessary for Cdc42 binding. Both in vitro and in vivo analyses reveal that deletion of this sequence abolishes binding of IQGAP11 to Cdc42. In addition, the ability of IQGAP1 to increase the amount of active Cdc42 in cells is abrogated upon removal of this region. An IQGAP1 mutant lacking the Cdc42 binding site mislocalizes to the cell periphery. These observations specifically define a short sequence of IQGAP1 that is required for its interaction with Cdc42 and demonstrate that Cdc42 binding is necessary for the normal subcellular distribution of IQGAP1. (C) 2003 Elsevier Science (USA). All rights reserved.