Rho family guanine nucleotide exchange factors (GEFs) regulate diverse cellular processes including cytoskeletal reorganization, cell adhesion, and differentiation via activation of the Rho GTPases. However, no studies have yet implicated Rho-GEFs as molecular regulators of the mesenchymal cell fate decisions which occur during development and repair of tissue damage. In this study, we demonstrate that the steady-state protein level of the Rho-specific GEF GEFT is modulated during skeletal muscle regeneration and that gene transfer of GEFT into cardiotoxin-injured mouse tibialis anterior muscle exerts a powerful promotion of skeletal muscle regeneration in vivo. In order to molecularly characterize this regenerative effect, we extrapolate the mechanism of action by examining the consequence of GEFT expression in multipotent cell lines capable of differentiating into a number of cell types, including muscle and adipocyte lineages. Our data demonstrate that endogenous GEFT is transcriptionally upregulated during myogenic differentiation and downregulated during adipogenic differentiation. Exogenous expression of GEFT promotes myogenesis of C2C12 cells via activation of RhoA, Rac1, and Cdc42 and their downstream effector proteins, while a dominant-negative mutant of GEFT inhibits this process. Moreover, we show that GEFT inhibits insulin-induced adipogenesis in 3T3L1 preadipocytes. In summary, we provide the first evidence that the Rho family signaling pathways act as potential regulators of skeletal muscle regeneration and provide the first reported molecular mechanism illustrating how a mammalian Rho family GEF controls this process by modulating mesenchymal cell fate decisions.