The PAK family of kinases are regulated through interaction with the small GTPases Cdc42 and Rac1, but little is known of the signaling components immediately upstream or downstream of these proteins. We have purified and cloned a new class of Rho-p21 guanine nucleotide exchange factor binding tightly through its N-terminal SH3 domain to a conserved proline-rich PAK sequence with a K_d of 24 nM. This PAK-interacting exchange factor (PIX), which is widely expressed and enriched in Cdc42- and Rac1-driven focal complexes, is required for PAK recruitment to these sites. PIX can induce membrane ruffling, with an associated activation of Rac1. Our results suggest a role for PIX in Cdc42-to-Rac1 signaling, involving the PIX/PAK complex.