SEC2 is an essential gene required for polarized growth of the yeast Saccharomyces cerevisiae. It encodes a protein of 759 amino acids that functions as a guanine nucleotide exchange factor for the small GTPase Sec4p, a regulator of Golgi to plasma membrane transport. Activation of Sec4p by Sec2p is needed for polarized transport of vesicles to exocytic sites. Temperature-sensitive (ts) mutations in sec2 and sec4 result in a tight block in secretion and the accumulation of secretory vesicles randomly distributed in the cell. The proper localization of Sec2p to secretory vesicles is essential for its function and is largely independent of Sec4p. Although the ts mutation sec2-78 does not affect nucleotide exchange activity, the protein is mislocalized. Here we present evidence that Ypt31/32p, members of Rab family of GTPases, regulate Sec2p function. First, YPT31/YPT32 suppress the sec2-78 mutation. Second, overexpression of Ypt31/32p restores localization of Sec2-78p. Third, Ypt32p and Sec2p interact biochemically, but Sec2p has no exchange activity on Ypt32p. We propose that Ypt32p and Sec4p act as part of a signaling cascade in which Ypt32p recruits Sec2p to secretory vesicles; once on the vesicle, Sec2p activates Sec4p, enabling the polarized transport of vesicles to the plasma membrane.