Interaction of p50 Rho GTPase-activating protein (p50RhoGAP) with Rho family small GTPases was investigated in a yeast two-hybrid system, by radioactive GAP assay, and in a Rac-regulated enzymatic reaction, through superoxide production by the phagocytic NADPH oxidase. The yeast two-hybrid system revealed an interaction between the C-terminal GAP domain and the N-terminal part of p50RhoGAP. The first 48 amino acids play a special role both in the stabilization of the intramolecular interaction and in recognition of the prenyl tail of small GTPases. The GAP assay and the NADPH oxidase activity indicate that the GTPase-activating effect of full-length p50RhoGAP is lower on non-prenylated than on prenylated small GTPase. Removal of amino acids 1-48 and 169-197 of p50RhoGAP increases the GAP effect on non-prenylated Rac, whereas prenylated Rac reacts equally well with the full-length and the truncated proteins. We suggest that p50RhoGAP is in an autoinhibited conformation stabilized by the stretches 1-48 and 169-197 and the prenyl group of the small GTPase plays a role in releasing this intramolecular restraint.