Prenylated Rab GTPases occur in the cytosol in their GDP-bound conformations bound to a cytosolic protein termed GDP-dissociation inhibitor (GDI). Rab-GDI complexes represent a pool of active, recycling Rab proteins that can deliver Rabs to specific and distinct membrane-bound compartments. Rab delivery to cellular membranes involves release of GDI, and the membrane-associated Rab protein then exchanges its bound GDP for GTP. We report here the identification of a novel, membrane-associated protein factor that can release prenylated Rab proteins from GDI. This GDI-displacement factor (GDF) is not a guanine nucleotide exchange factor because it did not influence the intrinsic rates of nucleotide exchange by Rabs 5, 7 or 9. Rather, GDF caused the release of each of these endosomal Rabs from GDI, permitting them to exchange nucleotide at their intrinsic rates. GDF displayed the greatest catalytic rate enhancement on Rab9-GDI complexes. However, catalytic rate enhancement paralleled the potency of GDI in blocking nucleotide exchange: GDI was shown to be most potent in blocking nucleotide exchange by Rab9. The failure of GDF to act on Rab1-GDI complexes suggests that it may be specific for endosomal Rab proteins. This novel, membrane-associated activity may be part of the machinery used to localize Rabs to their correct intracellular compartments.