Previous studies have identified a novel oncogene, rgr, which has homology to the guanine nucleotide exchange factor (GEF) Ral guanine dissociation stimulator (RALGDS). To determine the mechanism of activation of rgr, the wild-type form was isolated. rgr is expressed physiologically at very low levels, due, at least in part, to a long 5'-untranslated region that contains eight AUGs, which inhibit translation of the main open reading frame. When these regulatory sequences are removed, the wild-type gene is expressed at high levels. An investigation of how this GEF could transform cells showed that RGR interacts with RAS, supporting its involvement as a RAS-GEF. Because RAL is localized mainly to the Golgi, the expression of the RGR protein was identified in RK13 cells, a cell line that expresses endogenous rgr. RGR localizes to endomembranes. To determine its location upon transformation, a green fluorescent protein-RGR fusion protein was used to track the movement of RGR. Increasing amounts of expression result in enhanced localization of RGR to the plasma membrane. These results indicate that rgr is activated when its tight translational controls are eliminated and increased expression allows its relocation to the plasma membrane, where efficient activation of RAS occurs.