p116Rip was originally found to be a RhoA-binding protein, but its function has been unknown. Here, we clarify the function of p116Rip. Two critical findings were made. First, we found that p116Rip activated the GTPase activity of RhoA in vitro and that p116Rip overexpression in cells consistently diminished the epidermal growth factor-induced increase in GTP-bound RhoA. Second, p116Rip activated the myosin light chain phosphatase (MLCP) activity of the holoenzyme. p116Rip did not activate the catalytic subunit alone, indicating that the activation is due to the binding of p116Rip to the myosin phosphatase targeting subunit MYPT1. Interestingly, the activation of phosphatase was specific to myosin as substrate, and p116Rip directly bound to myosin, thus facilitating myosin/MLCP interaction. The gene silencing of p116Rip consistently and significantly increased myosin phosphorylation as well as stress fiber formation in cells. Based upon these findings, we propose that p116Rip is an important regulatory component that controls the RhoA signaling pathway, thus regulating MLCP activity and myosin phosphorylation in cells.