Geranylgeranyltransferase type II (GGTase-II) modifies small monomeric GTPases of the Rab family by attaching geranylgeranyl moieties onto two cysteines of their C-terminus. We investigated to what extent GGTase-II discriminates between its native substrate geranylgeranyl pyrophosphate (GGpp) and other phosphoisoprenoids, including farnesyl pyrophosphate (Fpp). On the basis of a novel fluorescent assay, we demonstrated that GGpp binds to GGTase-II with an affinity of 8 +/- 4 nM, while Fpp is bound less strongly (K(d) = 60 +/- 8 nM). Analysis of the binding kinetics of four different phosphoisoprenoids indicated that in all cases association is rapid, with rate constants in the range of 0.15 nM(-1) s(-1). In contrast, the dissociation rates differed greatly, depending on the phosphoisoprenoid used, with weak binding substrates generally displaying an increased rate of dissociation. The affinity of GGpp and Fpp for GGTase-II was also determined in the presence of the Rab7-REP-1 complex. The affinity for GGpp was essentially unaffected by the presence of the complex; Fpp on the other hand bound less strongly to the GGTase-II under these conditions, resulting in a K(d) of 260 +/- 60 nM. In vitro prenylation experiments were used to establish that Fpp not only does bind to GGTase-II but also is transferred with an observed rate constant of 0.082 s(-1) which is very similar to that of GGpp. The implications of the low level of discrimination by GGTase-II for the in vivo specificity of the enzyme and the use of farnesyltransferase inhibitors in anti-cancer therapy are discussed.