GDP-dissociation inhibitors (GDIs) form one of the classes of regulatory proteins that modulate the cycling of the Ras superfamily of GTPases between active GTP-bound and inactive GDP-bound states. We report here the characterization of the Caenorhabditis elegans RhoGDI (CeRhoGDI) as part of our investigations into Rho-GTPase signalling pathways that are involved in nematode development. CeRhoGDI is a 23-kDa protein that is localized predominantly in the cytosol. CeRhoGDI interacts only with the lipid-modified forms of C. elegans Rho-GTPases, CeRhoA, CeRac1 and Cdc42Ce, in vitro and is able to solubilize the membrane-bound forms of these GTPases. CeRhoGDI recognizes the GTPases in both GTP- and GDP-bound forms; hence it inhibits both the guanine-nucleotide dissociation and GTP-hydrolysis activities. The inhibitory activity towards the GTP-bound GTPases is weak compared with that towards GDP-bound GTPases. CeRhoGDI is expressed throughout development and is highly expressed in marginal and vulval epithelial cells, in sperm cells and spicules. Taken together, our results suggest that CeRhoGDI may be involved in specific morphogenetic events mediated by the C. elegans Rho-GTPases.