Rho GTPases have multiple, yet poorly defined functions during cytokinesis. By screening a Neurospora crassa knock-out collection for Rho guanine nucleotide exchange factor (GEF) mutants that phenocopy rho-4 defects (i.e. lack of septa, slow growth, abnormal branching and cytoplasmic leakage), we identified two strains defective in homologues of Bud3p and Rgf3 of budding and fission yeast respectively. The function of these proteins as RHO4-specific GEFs was determined by in vitro assays. In vivo microscopy suggested that the two GEFs and their target GTPase act as two independent modules during the selection of the septation site and the actual septation process. Furthermore, we determined that the N. crassa homologue of the anillinrelated protein BUD4 is required for septum initiation and that its deficiency leads to typical rho4 defects. Localization of BUD4 as a cortical ring prior to septation initiation was independent of functional BUD3 or RGF3. These data position BUD4 upstream of both RHO4 functions in the septation process and make BUD4 a prime candidate for a cortical marker protein involved in the selection of future septation sites. The persistence of both BUD proteins and of RHO4 at the septal pore suggests additional functions of these proteins at mature septa.