The members of the Dock180 superfamily of proteins are novel guanine nucleotide exchange factors (GEF) for Rho family GTPases and are linked to multiple biological processes from worms to mammals. ELMO is a critical regulator of Dock180, and the Dock180-ELMO complex functions as a bipartite GEF for Rac. We identified a mechanism wherein the PH domain of ELMO, by binding the Dock180-Rac complex in trans, stabilizes Rac in the nucleotide-free transition state. Mutagenesis studies reveal that this ELMO PH domain-dependent regulation is essential for the Dock180-ELMO complex to function in phagocytosis and cell migration. Genetic rescue studies in Caenorhabditis elegans using ELMO and its homolog CED-12 support the above observations in vivo. These data reveal a new mode of action of PH domains and a novel, evolutionarily conserved mechanism by which a bipartite GEF can activate Rac.