A rapid switch between growth and shrinkage at microtubule ends is fundamental for many cellular processes. The main structural components of microtubules, the alphabeta-tubulin heterodimers, are generated through a complex folding process where GTP hydrolysis [Fontalba et al. (1993) J. Cell Sci. 106, 627-632] and a series of molecular chaperones are required [Sternlicht et al. (1993) Proc. Natl. Acad. Sci. USA 90, 9422-9426; Campo et al. (1994) FEBS Lett. 353, 162-166; Lewis et al. (1996) J. Cell Biol. 132, 1-4; Lewis et al. (1997) Trends Cell Biol. 7, 479-484; Tian et al. (1997) J. Cell Biol. 138, 821-823]. Although the participation of the cofactor proteins along the tubulin folding route has been well established in vitro, there is also evidence that these protein cofactors might contribute to diverse microtubule processes in vivo [Schwahn et al. (1998) Nature Genet. 19, 327-332; Hirata et al. (1998) EMBO J. 17, 658-666; Fanarraga et al. (1999) Cell Motil. Cytoskel. 43, 243-254]. Microtubule dynamics, crucial during mitosis, cellular motility and intracellular transport processes, are known to be regulated by at least four known microtubule-destabilizing proteins. OP18/Stathmin and XKCM1 are microtubule catastrophe-inducing factors operating through different mechanisms [Waters and Salmon (1996) Curr. Biol. 6, 361-363; McNally (1999) Curr. Biol. 9, R274-R276]. Here we show that the tubulin folding cofactor D, although it does not co-polymerize with microtubules either in vivo or in vitro, modulates microtubule dynamics by sequestering beta-tubulin from GTP-bound alphabeta-heterodimers.