The small guanosine triphosphate (GTP)-binding proteins of the Rho family are implicated in various cell functions, including establishment and maintenance of cell polarity. Activity of Rho guanosine triphosphatases (GTPases) is not only regulated by guanine nucleotide exchange factors and GTPase-activating proteins but also by guanine nucleotide dissociation inhibitors (GDIs). These proteins have the ability to extract Rho proteins from membranes and keep them in an inactive cytosolic complex. Here, we show that Rdi1, the sole Rho GDI of the yeast Saccharomyces cerevisiae, contributes to pseudohyphal growth and mitotic exit. Rdi1 interacts only with Cdc42, Rho1, and Rho4, and it regulates these Rho GTPases by distinct mechanisms. Binding between Rdi1 and Cdc42 as well as Rho1 is modulated by the Cdc42 effector and p21-activated kinase Cla4. After membrane extraction mediated by Rdi1, Rho4 is degraded by a novel mechanism, which includes the glycogen synthase kinase 3beta homologue Ygk3, vacuolar proteases, and the proteasome. Together, these results indicate that Rdi1 uses distinct modes of regulation for different Rho GTPases.