The G(M2) activator protein is a substrate specific cofactor for degradation of G(M2) ganglioside by lysosomal beta-hexosaminidase A. Mutations in the gene encoding the activator result in the AB-variant form of G(M2) gangliosidosis. The activator protein contains at least three functional elements; a hydrophobic binding pocket, an oligosaccharide binding site(s), and an area that interacts with hexosaminidase A. In this report a fluorescence dequenching assay specific for only the hydrophobic binding pocket is evaluated and optimized. It is shown that various glycolipids inhibit the transport between liposomes of a self-quenching fluorescent lipid probe, octadecylrhodamine, by the activator protein. The level of inhibition produced by each glycolipid is then used to characterize the oligosaccharide-binding specificity of the activator. The fluorescence dequenching assay is also used to evaluate the functionality of a truncated form of the activator protein. Our results indicate that this simple assay can be used to determine structure-function relationships within the normal or mutant forms of the activator. The data suggest that the C-terminus of the activator is required to produce a functional hydrophobic binding pocket.