Ras proteins from Saccharomyces cerevisiae differ from mammalian Ha-Ras in their extended C-terminal hypervariable region. We have analyzed the function of this region and the effect of its farnesylation with respect to the action of the GDP/GTP exchange factors (GEFs) Cdc25p and Sdc25p and the target adenylyl cyclase. Whereas Ras2p farnesylation had no effect on the interaction with purified GEFs from the Cdc25 family, this modification became a strict requirement for stimulation of the nucleotide exchange on Ras using reconstituted cell-free systems with GEFs bound to the cell membrane. Determination of GEF effects showed that in cell membrane the Cdc25p dependent activity on Ras2p was predominant over that of Sdc25p. In contrast to full-length GEFs, a membrane-bound C-terminal region containing the catalytic domain of Cdc25p was still able to react productively with unfarnesylated Ras2p. These results indicate that in membrane-bound full-length GEF the N-terminal moiety regulates the interaction between catalytic domain and farnesylated Ras2p.GDP. Differently from GEF, full activation of adenylyl cyclase did not require farnesylation of Ras2p.GTP, even if this step of maturation was found to facilitate the interaction. The use of Ha-Ras/Ras2p chimaeras of different length emphasized the key role of the hypervariable region of Ras2p in inducing maximum activation of adenylyl cyclase and for a productive interaction with membrane-bound GEF.