The small GTP-binding proteins Rac, Rho, and Cdc42 were shown to mediate a variety of signaling pathways including cytoskeletal rearrangements, cell-cycle progression, and transformation. Key to the proper function of these GTP-binding proteins is an efficient shut-off mechanism that ensures the decay of the signal. Regulatory proteins termed GAPs (GTPase-activating proteins) enhance the intrinsic GTP hydrolysis of the GTP-binding proteins, thereby ensuring signal termination. We have used site-specific mutagenesis to elucidate the limit domain for GAP activity in Cdc42-GAP, and show that in addition to the known GAP-homology domain (three conserved boxes), a C-terminal region outside that domain is also essential for GAP activity. In addition, we have replaced the conserved arginine (Arg305), which was suggested by structural studies to be a key catalytic residue, with an alanine and found that the R305A Cdc42-GAP mutant has a greatly diminished catalytic capacity but is still able to bind Cdc42 with high affinity. Thus, a key catalytic role for this residue is confirmed. However, we also present evidence for the involvement of an additional residue(s), since the R305A Cdc42-GAP mutant still exhibits measurable activity. Some of this residual activity might result from a neighboring arginine, since a double mutant R305A/R306A shows a further decrease in catalytic activity.