Small GTPases of the Ras family are major players of signal transduction in eukaryotic cells. They receive signals from a number of receptors and transmit them to a variety of effectors. The distribution of signals to different effector molecules allows for the generation of opposing effects like proliferation and differentiation. To understand the specificity of Ras signaling, we investigated the activation of RalGDS, one of the Ras effector proteins with guanine- nucleotide exchange factor activity for Ral. We determined the GTP level on RalA and showed that the highly conserved Ras binding domain (RBD) of RalGDS, which mediates association with Ras, is important but not sufficient to explain the stimulation of the exchange factor. Although a point mutation in the RBD of RalGDS, which abrogates binding to Ras, renders RalGDS independent to activated Ras, an artificially membrane-targeted version of RalGDS lacking its RBD could still be activated by Ras. The switch II region of Ras is involved in the activation, because the mutant Y64W in this region is impaired in the RalGDS activation. Furthermore, it is shown that Rap1, which was originally identified as a Ras antagonist, can block Ras- mediated RalGDS signaling only when RalGDS contains an intact RBD. In addition, kinetic studies of the complex formation between RalGDS-RBD and Ras suggest that the fast association between RalGDS and Ras, which is analogous to the Ras/Raf case, achieves signaling specificity. Conversely, the Ras.RalGDS complex has a short lifetime of 0.1 s and Rap1 forms a long- lived complex with RalGDS, possibly explaining its antagonistic effect on Ras.