Neurotrophins, such as NGF and BDNF, induce sustained activation of Rap1 small G protein and ERK, which are essential for neurite outgrowth. We show involvement of a GDP/GTP exchange factor (GEF) for Rap1, PDZ-GEF1, in these processes. PDZ-GEF1 is activated by GTP-Rap1 via a positive feedback mechanism. Upon NGF binding, the TrkA neurotrophin receptor is internalized from the cell surface, passes through early endosomes, and arrives in late endosomes. A tetrameric complex forms between PDZ-GEF1, synaptic scaffolding molecule and ankyrin repeat-rich membrane spanning protein which interacts directly with the TrkA receptor. At late endosomes, the complex induces sustained activation of Rap1 and ERK, resulting in neurite outgrowth. In cultured rat hippocampal neurons, PDZ-GEF1 is recruited to late endosomes in a BDNF-dependent manner involved in BDNF-induced neurite outgrowth. Thus, the interaction of PDZ-GEF1 with an internalized neurotrophin receptor transported to late endosomes induces sustained activation of both Rap1 and ERK and neurite outgrowth.