Ras proteins operate as molecular switches in signal transduction pathways downstream of tyrosine kinases and G-protein-coupled receptors. Ras is switched from the inactive GDP-bound state to the active GTP-bound state by guanine nucleotide exchange factors (GEFs). We report here the cloning and characterization of RasGRP2, a longer alternatively spliced form of the recently cloned RapGEF, CalDAG-GEFI. A unique feature of RasGRP2 is that it is targeted to the plasma membrane by a combination of N-terminal myristoylation and palmitoylation. In vivo, RasGRP2 selectively catalyzes nucleotide exchange on N- and Ki-Ras, but not Ha-Ras. RasGRP2 also catalyzes nucleotide exchange on Rap1, but this RapGEF activity is less potent than that associated with CalDAG-GEFI. The nucleotide exchange activity of RasGRP2 toward N-Ras is stimulated by diacylglycerol and inhibited by calcium. The effects of diacylglycerol and calcium are additive but are not accompanied by any detectable change in the subcellular localization of RasGRP2. In contrast, CalDAG-GEFI is localized predominantly to the cytosol and lacks Ras exchange activity in vivo. However, prolonged exposure to phorbol esters, or growth in serum, results in localization of CalDAG-GEFI to the cell membrane and restoration of Ras exchange activity. Expression of RasGRP2 or CalDAG-GEFI in NIH3T3 cells transfected with wild type N-Ras results in an accelerated growth rate but not morphologic transformation. Thus, under appropriate growth conditions, CalDAG-GEFI and RasGRP2 are dual specificity Ras and Rap exchange factors.