The deleted in liver cancer 2 (DLC2) gene, located at chromosome 13q12.3, is a recently identified tumor suppressor gene. The gene is frequently underexpressed in human hepatocellular carcinoma, and its chromosomal region shows frequent deletion. DLC2 encodes a unique RhoGTPase-activating protein (RhoGAP) specific for small RhoGTPases, RhoA, and Cdc42. With bioinformatic analysis, we have identified four different isoforms of DLC2, which we named DLC2alpha, DLC2beta, DLC2gamma, and DLC2delta. Three of the isoforms contain the RhoGAP domain, namely, DLC2alpha, DLC2beta, and DLC2gamma. Ectopic expression of these three isoforms in mouse fibroblasts showed cytoplasmic localization. Of interest, overexpression of these isoforms suppressed the lysophosphatidic acid-induced stress fiber formation in mouse fibroblasts and changed the morphology of the transfected cells from angular and spindle to round. Furthermore, the RhoA pull-down assay demonstrated a remarkable reduction in RhoA activity in the DLC2 transiently transfected cells. In contrast, cells transfected with inactive DLC2 GAP-mutant remained unchanged in cell morphology, actin stress fiber formation, and RhoA activity. HepG2 hepatoma cells stably transfected with the DLC2gamma isoform also changed to a round morphology, as in mouse fibroblasts. Of significance, these DLC2gamma stable transfectants showed marked suppression in cell proliferation, motility, and transformation, and there was a remarkable reduction in in vivo RhoA activity in these cells. These results suggest that DLC2 exhibits its tumor suppressor functions in vivo as a GAP specific for RhoA, exerting its effects in suppression of cytoskeleton reorganization, cell growth, cell migration, and transformation.