Dbl family guanine nucleotide exchange factors (GEFs) for Rho family small GTPases invariably contain a pleckstrin homology (PH) domain that immediately follows their Dbl homology (DH) domain. Although the DH domain is responsible for GEF activity, the role of the PH domain is less clear. We previously reported that PH domains from several Dbl family members bind phosphoinositides with very low affinity (K(d) values in the 10 microM range). This suggests that, unlike several other PH domains, those from Dbl proteins will not function as independent membrane-targeting modules. To determine the functional relevance of low affinity phosphoinositide binding, we mutated the corresponding PH domain from Tiam-1 to abolish its weak, specific binding to phosphatidylinositol 3-phosphate. We first confirmed in vitro that phosphoinositide binding by the isolated DH/PH domain was impaired by the mutations but that intrinsic GEF activity was unaffected. We then introduced the PH domain mutations into full-length Tiam-1 and found that its ability to activate Rac1 or serum response factor in vivo was abolished. Immunofluorescence studies showed that membrane targeting of Tiam-1 was essentially unaffected by mutations in the C-terminal PH domain. Our studies therefore indicate that low affinity phosphatidylinositol 3-phosphate binding by the C-terminal PH domain may be critical for in vivo regulation and activity of Tiam-1 but that the PH domain exerts its regulatory effects without altering membrane targeting. We suggest instead that ligand binding to the PH domain induces conformational and/or orientational changes at the membrane surface that are required for maximum exchange activity of its adjacent DH domain.