Members of the Rho family of GTP-binding proteins are localized in the cytosol of cells by complexation with a protein known as (Rho)GDI. We show by sucrose gradient equilibrium sedimentation analysis that all of the Rac protein present in human neutrophil cytosol exists as a complex with (Rho)GDI under non-activating conditions. This interaction can be disrupted in the presence of various lipids which have been shown to have biological activity in a variety of systems, including NADPH oxidase activation. Particularly effective were arachidonic acid, phosphatidic acid, and phosphatidylinositols. These lipids were active at concentrations from 0.5-50 microM and were capable of disrupting complexation of (Rho)GDI with both GDP- and GTP-bound forms of Rac, although the latter were more sensitive to lipid. These data suggest that certain lipids generated in chemoattractant-stimulated neutrophils may play a role in modulating the activity of Rac and thus NADPH oxidase activity.