Proteins of the cytohesin/Arno/Grp1 family of Arf activators are positive regulators of the insulin-signaling pathway and control various remodeling events at the plasma membrane. Arno has a catalytic Sec7 domain, which promotes GDP to GTP exchange on Arf, followed by a pleckstrin homology (PH) domain. Previous studies have revealed two functions of the PH domain: inhibition of the Sec7 domain and membrane targeting. Interestingly, the Arno PH domain interacts not only with a phosphoinositide (phosphatidylinositol 4,5-bisphosphate or phosphatidylinositol 3,4,5-trisphosphate) but also with an activating Arf family member, such as Arf6 or Arl4. Using the full-length membrane-bound forms of Arf1 and Arf6 instead of soluble forms, we show here that the membrane environment dramatically affects the mechanism of Arno activation. First, Arf6-GTP stimulates Arno at nanomolar concentrations on liposomes compared with micromolar concentrations in solution. Second, mutations in the PH domain that abolish interaction with Arf6-GTP render Arno completely inactive when exchange reactions are reconstituted on liposomes but have no effect on Arno activity in solution. Third, Arno is activated by its own product Arf1-GTP in addition to a distinct activating Arf isoform. Consequently, Arno activity is strongly modulated by competition with Arf effectors. These results show that Arno behaves as a bistable switch, having an absolute requirement for activation by an Arf protein but, once triggered, becoming highly active through the positive feedback effect of Arf1-GTP. This property of Arno might provide an explanation for its function in signaling pathways that, once triggered, must move forward decisively.