ADP-ribosylation factor 1 (Arf1) is an essential N-myristoylated 21-kDa GTP-binding protein with activities that include the regulation of membrane traffic and phospholipase D activity. Both the N terminus of the protein and the N-myristate bound to glycine 2 have previously been shown to be essential to the function of Arf in cells. We show that the bound nucleotide affects the conformation of either the N terminus or residues of Arf1 that are in direct contact with the N terminus. This was demonstrated by examining the effects of mutations in this N-terminal domain on guanosine 5'-O-(3-thio)triphosphate (GTP gamma S) and GDP binding and dissociation kinetics. Arf1 mutants, lacking 13 or 17 residues from the N terminus or mutated at residues 3-7, had a greater affinity for GTP gamma S and a lower affinity for GDP than did the wild-type protein. As the N terminus is required for interactions with target proteins, we conclude that the N terminus of Arf1 is a GTP-sensitive effector domain. When Arf1 was acylated, the GTP-dependent conformational changes were codependent on added phospholipids. In the absence of phospholipids, myristoylated Arf1 has a lower affinity for GTP gamma S than for GDP, and in the presence of phospholipids, the myristoylated protein has a greater affinity for GTP gamma S than for GDP. Thus, N-myristoylation is a critical component in the construction of this phospholipid- and GTP-dependent switch.