The GDP-dissociation-inhibitor (GDI) for Rho-like GTP-binding proteins is capable of three different biochemical activities. These are the inhibition of GDP dissociation, the inhibition of GTP hydrolysis, and the stimulation of the release of GTP-binding proteins from membranes. In order to better understand how GDI interactions with Rho-like proteins mediate these different effects, we have set out to develop a direct fluorescence spectroscopic assay for the binding of the GDI to the Rho-like protein, Cdc42Hs. We show here that when the GDI interacts with Cdc42Hs that contains bound N-methylanthraniloyl GDP (Mant-GDP), there is an approximately 20% quenching of the Mant fluorescence. The GDI-induced quenching is only observed when Mant-GDP is bound to Spodoptera frugiperda-expressed Cdc42Hs and is not detected when the Mant nucleotide is bound to Escherichia coli-expressed Cdc42Hs and thus shows the same requirement for isoprenylated GTP-binding protein as that observed when assaying GDI activity. A truncated Cdc42Hs mutant that lacks 8 amino acids from the carboxyl terminus and is insensitive to GDI regulation also does not show changes in the fluorescence of its bound Mant-GDP upon GDI addition. Thus, the GDI-induced quenching of Mant-GDP provides a direct read-out for the binding of the GDI to Cdc42Hs. Titration profiles of the GDI-induced quenching of the Mant-GDP fluorescence are saturable and are well fit to a simple 1:1 binding model for Cdc42Hs-GDI interactions with an apparent Kd value of 30 nM. A very similar Kd value (28 nM) is measured when titrating the GDI-induced quenching of the fluorescence of Mant-guanylyl imidotriphosphate, bound to Cdc42Hs. These results suggest that the GDI can bind to the GDP-bound and GTP-bound forms of Cdc42Hs equally well. We also have used the fluorescence assay for GDI interactions to demonstrate that the differences in functional potency observed between the GDI molecule and a related human leukemic protein, designated LD4, are due to differences in their binding affinities for Cdc42Hs. This, together with the results from studies using GDI/LD4 chimeras, allow us to conclude that a limit region within the carboxyl-terminal domain of the GDI molecule is responsible for its ability to bind with higher affinity (compared with LD4) to Cdc42Hs.