Ras and Rho small GTPases possessing a C-terminal polybasic region (PBR) are vital signaling proteins whose misregulation can lead to cancer. Signaling by these proteins depends on their ability to bind guanine nucleotides and their prenylation with a geranylgeranyl or farnesyl isoprenoid moiety and subsequent trafficking to cellular membranes. There is little previous evidence that cellular signals can restrain nonprenylated GTPases from entering the prenylation pathway, leading to the general belief that PBR-possessing GTPases are prenylated as soon as they are synthesized. Here, we present evidence that challenges this belief. We demonstrate that insertion of the dominant negative mutation to inhibit GDP/GTP exchange diminishes prenylation of Rap1A and RhoA, enhances prenylation of Rac1, and does not detectably alter prenylation of K-Ras. Our results indicate that the entrance and passage of these small GTPases through the prenylation pathway is regulated by two splice variants of SmgGDS, a protein that has been reported to promote GDP/GTP exchange by PBR-possessing GTPases and to be up-regulated in several forms of cancer. We show that the previously characterized 558-residue SmgGDS splice variant (SmgGDS-558) selectively associates with prenylated small GTPases and facilitates trafficking of Rap1A to the plasma membrane, whereas the less well characterized 607-residue SmgGDS splice variant (SmgGDS-607) associates with nonprenylated GTPases and regulates the entry of Rap1A, RhoA, and Rac1 into the prenylation pathway. These results indicate that guanine nucleotide exchange and interactions with SmgGDS splice variants can regulate the entrance and passage of PBR-possessing small GTPases through the prenylation pathway.