Ubiquitination of eukaryotic proteins regulates a broad range of cellular processes, including regulation of T cell activation and tolerance. We have previously demonstrated that gene related to anergy in lymphocytes (GRAIL), a ring finger ubiquitin E3 ligase, is required for the induction of T cell anergy; however, the substrate(s) for GRAIL E3 ligase activity is/are unknown. In this study, we report a novel prokaryotic system developed to screen for substrates of E3 ligases. Using this screen, Rho guanine dissociation inhibitor (RhoGDI) was identified as a potential substrate of GRAIL. GRAIL was subsequently demonstrated to bind and ubiquitinate RhoGDI, although GRAIL-mediated ubiquitination of RhoGDI did not result in proteosomal degradation. Expression of GRAIL in T cells resulted in specific inhibition of RhoA GTPase activation; activation of Rac1, cdc42, and Ras GTPases were not affected. Interestingly, stable T cell lines expressing dominant-negative RhoA mimicked the GRAIL-mediated IL-2 inhibition phenotype, and T cells expressing constitutively active RhoA were able to overcome GRAIL-mediated inhibition of IL-2 expression. These findings validate our prokaryotic screen as a method of identifying substrates for ubiquitin E3 ligases and suggest a role for Rho effector molecules in T cell anergy.