Exchange proteins activated by cAMP (cyclic AMP) 2 (Epac2) is a guanine nucleotide exchange factor for Rap1, a small G protein involved in many cellular functions, including cell adhesion, differentiation, and exocytosis. Epac2 interacts with Ras-GTP via a Ras association (RA) domain. Previous studies have suggested that the RA domain was dispensable for Epac2 function. Here we show for the first time that Ras and cAMP regulate Epac2 function in a parallel fashion and the Ras-Epac2 interaction is required for the cAMP-dependent activation of endogenous Rap1 by Epac2. The mechanism for this requirement is not allosteric activation of Epac2 by Ras but the compartmentalization of Epac2 on the Ras-containing membranes. A computational modeling is consistent with this compartmentalization being a function of both the level of Ras activation and the affinity between Ras and Epac2. In PC12 cells, a well-established model for sympathetic neurons, the Epac2 signaling is coupled to activation of mitogen-activated protein kinases and contributes to neurite outgrowth. Taken together, the evidence shows that Epac2 is not only a cAMP sensor but also a bona fide Ras effector. Coincident detection of both cAMP and Ras signals is essential for Epac2 to activate Rap1 in a temporally and spatially controlled manner.