The small GTPases Rab5 and Rab21 are closely related, and play essential roles in endocytic trafficking. Rab5 is regulated by VPS9-domain-containing guanine nucleotide exchange factors. Here, we describe a new VPS9-domain protein with ankyrin repeats, the VPS9-ankyrin-repeat protein (Varp). Varp interacts preferentially with GDP-bound Rab21 and has a much stronger guanine nucleotide exchange activity towards Rab21 than Rab5. Furthermore, RNAi-mediated depletion of endogenous Varp significantly disrupts the activity of Rab21 in HeLa cells. Ectopically expressed Varp mainly localizes to early endosomes and causes enlargement of early endosomes and giant late endosomes. Both the VPS9 domain and ankyrin-repeats are required for the endosomal localization and the activity of Varp in vivo. These results suggest that Varp is a potential Rab21 guanine nucleotide exchange factor and might regulate endosome dynamics in vivo.