Autoinhibited p21-activated kinase 1 (Pak1) can be activated in vitro by the plasma membrane-bound Rho GTPases Rac1 and Cdc42 as well as by the lipid phosphatidylinositol (4,5)-bisphosphate (PIP2). Activator binding is mediated by a GTPase-binding motif and an adjacent phosphoinositide-binding motif. Whether these two classes of activators play alternative, additive, or synergistic roles in Pak1 activation is unknown, as is their contributions to Pak1 activation in vivo. To address these questions, we developed a system to mimic the membrane anchoring of Rho GTPases by creating liposomes containing both PIP2 and a Ni2+-NTA modified lipid capable of binding hexahistidine-tagged Cdc42. We find that among all biologically relevant phosphoinositides, only PIP2 is able to synergistically activate Pak1 in concert with Cdc42. Membrane-binding of the kinase was highly sensitive to the spatial density of PIP2 and Pak1 demonstrated dramatically enhanced affinity for Cdc42 anchored in a PIP2 environment. To validate these findings in vivo, we utilized an inducible recruitment system to drive the ectopic synthesis of PIP2 on Golgi membranes, which normally have active Cdc42 but lack significant concentrations of PIP2. Pak1 was recruited to PIP2-containing membranes in a manner dependent on the ability of Pak1 to bind to both PIP2 and Cdc42. These findings provide a mechanistic explanation for the essential role of both phosphoinositides and GTPases in Pak1 recruitment and activation. In contrast, Ack, another Cdc42 effector kinase that lacks an analogous phosphoinositide-binding motif, fails to show the same enhancement of membrane binding and activation by PIP2, thus indicating that regulation by PIP2 and Cdc42 could provide a combinatorial code for activation of different GTPase effectors in different subcellular locations.