Leukemia-associated Rho guanine nucleotide exchange factor (LARG) was originally identified as a fusion partner with mixed-lineage leukemia in a patient with acute myeloid leukemia. LARG possesses a tandem Dbl homology and pleckstrin homology domain structure and, consequently, may function as an activator of Rho GTPases. In this study, we demonstrate that LARG is a functional Dbl protein. Expression of LARG in cells caused activation of the serum response factor, a known downstream target of Rho-mediated signaling pathways. Transient overexpression of LARG did not activate the extracellular signal-regulated kinase or c-Jun NH(2)-terminal kinase mitogen-activated protein kinase cascade, suggesting LARG is not an activator of Ras, Rac, or Cdc42. We performed in vitro exchange assays where the isolated Dbl homology (DH) or DH/pleckstrin homology domains of LARG functioned as a strong activator of RhoA, but exhibited no activity toward Rac1 or Cdc42. We found that LARG could complex with RhoA, but not Rac or Cdc42, in vitro, and that expression of LARG caused an increase in the levels of the activated GTP-bound form of RhoA, but not Rac1 or Cdc42, in vivo. Thus, we conclude that LARG is a RhoA-specific guanine nucleotide exchange factor. Finally, like activated RhoA, we determined that LARG cooperated with activated Raf-1 to transform NIH3T3 cells. These data demonstrate that LARG is the first functional Dbl protein mutated in cancer and indicate LARG-mediated activation of RhoA may play a role in the development of human leukemias.