Rho family GTPases control a diverse range of cellular processes, and their deregulation has been implicated in human cancer. Guanine nucleotide dissociation inhibitors (GDIs) bind and sequester GTPases in the cytosol, restricting their actions. RhoGDI2 is a member of the GDI family that acts as a metastasis suppressor in a variety of cancer types; however, very little is known about the regulation of this protein. Here, we present a mechanism for inactivation of RhoGDI2 via protein kinase C (PKC) phosphorylation of Ser31 in a region that contacts GTPases. In cells, RhoGDI2 becomes rapidly phosphorylated at Ser31 in response to phorbol 12-myristate 13-acetate stimulation. Based on the effects of pharmacological inhibitors and knockdown by siRNA, we determine that conventional type PKCα is responsible for this phosphorylation. Phospho-mimetic S31E-RhoGDI2 exhibits reduced binding to Rac1 relative to wild type, with a concomitant failure to reduce levels of activated endogenous Rac1 or remove Rac1 from membranes. These results reveal a mechanism of downregulation of RhoGDI2 activity through PKC-mediated phosphorylation of Ser31. We hypothesize that this mechanism may serve to neutralize RhoGDI2 function in tumors that express RhoGDI2 and active PKCα.