Ras GTPases function as binary switches in the signaling pathways controlling cell growth and differentiation by cycling between the inactive GDP-bound and the active GTP-bound states. They are activated through interaction with guanine nucleotide exchange factors (GEFs) that catalyze the exchange of bound GDP with cytosolic GTP. In a conventional scheme, the biochemical roles of GEFs are postulated as stimulating the release of the bound GDP and stabilizing a nucleotide-free transition state of Ras. Herein we have examined in detail the catalyzed GDP/GTP exchange reaction mechanism by a Ras specific GEF, GRF1. In the absence of free nucleotide, GRF1 could not efficiently stimulate GDP dissociation from Ras. The release of the Ras-bound GDP was dependent upon the concentration and the structure of the incoming nucleotide, in particular, the hydrophobicity of the beta and gamma phosphate groups, suggesting that the GTP binding step is a prerequisite for GDP dissociation, is the rate-limiting step in the GEF reaction, or both. Using a pair of fluorescent guanine nucleotides (N-methylanthraniloyl GDP and 2',3'-O-(2,4,6-trinitrocyclohexadienylidene)-GTP) as donor and acceptor probes, we were able to detect fluorescence resonance energy transfer between the incoming GTP and the departing GDP on Ras under controlled kinetic conditions, providing evidence that there may exist a novel intermediate of the GEF-Ras complex that transiently binds to two nucleotides simultaneously. Furthermore, we found that Ras was capable of binding pyrophosphate (PPi) with a dissociation constant of 26 microM and that PPi and GMP, but neither alone, synergistically potentiated the GRF1-stimulated GDP dissociation from Ras. These results strongly support a GEF reaction mechanism by which nucleotide exchange occurs on Ras through a direct GTP/GDP displacement model.