PTPL1 is an intracellular protein-tyrosine phosphatase that contains five PDZ domains. Here, we present the cloning of a novel 150-kDa protein, the four most C-terminal amino acid residues of which specifically interact with the fourth PDZ domain of PTPL1. The molecule contains a GTPase-activating protein (GAP) domain, a cysteine-rich, putative Zn2+- and diacylglycerol-binding domain, and a region of sequence homology to the product of the Caenorhabditis elegans gene ZK669.1a. The GAP domain is active on Rho, Rac, and Cdc42 in vitro but with a clear preference for Rho; we refer to the molecule as PTPL1-associated RhoGAP 1, PARG1. Rho is inactivated by GAPs, and protein-tyrosine phosphorylation has been implicated in Rho signaling. Therefore, a complex between PTPL1 and PARG1 may function as a powerful negative regulator of Rho signaling, acting both on Rho itself and on tyrosine phosphorylated components in the Rho signal transduction pathway.