Phorbol esters are potent tumor promoters widely used for investigating mechanisms of cell transformation with protein kinase C (PKC) generally considered as being their only protein target. Lysophosphatidic acid (LPA) can act as a mitogen, affecting cell shape and the actin cytoskeleton. There is no identified functional target for LPA. We have isolated a cDNA encoding a protein n-chimaerin that is a high affinity phorbol ester receptor and a p21rac-GTPase activating protein (rac-GAP). p21rac is a member of the ras superfamily of small molecular weight GTP-binding proteins, which stimulates actin microfilament formation in Swiss 3T3 cells and superoxide production by the neutrophil oxidase. We now show that the rac-GAP activity of n-chimaerin is stimulated by phosphatidylserine (PS) and phosphatidic acid (PA) and that phorbol esters can synergize with PS and PA. LPA, in contrast, was found to inhibit n-chimaerin. The phospholipid/phorbol ester modulation of the rac-GAP activity requires the PKC-like cysteine-rich domain of n-chimaerin. Thus, n-chimaerin is a novel functional target (distinct from PKC) for both phorbol esters and LPA. These data suggest that the physiological role of n-chimaerin is to link events initiating at the cell surface/membrane with p21rac effector pathways.