Recent studies established that the Rac-GAP beta2-chimaerin plays important roles in development, neuritogenesis, and cancer progression. A unique feature of beta2-chimaerin is that it can be activated by phorbol esters and the lipid second messenger diacylglycerol (DAG), which bind with high affinity to its C1 domain and promote beta2-chimaerin translocation to membranes, leading to the inactivation of the small G-protein Rac. Crystallographic evidence and cellular studies suggest that beta2-chimaerin remains in an inactive conformation in the cytosol with the C1 domain inaccessible to ligands. We developed a series of beta2-chimaerin point mutants in which intramolecular contacts that occlude the C1 domain have been disrupted. These mutants showed enhanced translocation in response to phorbol 12-myristate 13-acetate (PMA) in cells. Binding assays using [(3)H]phorbol 12,13-dibutyrate ([(3)H]PDBu) revealed that internal contact mutants have a reduced acidic phospholipid requirement for phorbol ester binding. Moreover, disruption of intramolecular contacts enhances binding of beta2-chimaerin to acidic phospholipid vesicles and confers enhanced Rac-GAP activity in vitro. These studies suggest that beta2-chimaerin must undergo a conformational rearrangement in order to expose its lipid binding sites and become activated.