P-Rex1 is a GEF (guanine-nucleotide-exchange factor) for the small G-protein Rac that is activated by PIP3 (phosphatidylinositol 3,4,5-trisphosphate) and Gbetagamma subunits and inhibited by PKA (protein kinase A). In the present study we show that PP1alpha (protein phosphatase 1alpha) binds P-Rex1 through an RVxF-type docking motif. PP1alpha activates P-Rex1 directly in vitro, both independently of and additively to PIP3 and Gbetagamma. PP1alpha also substantially activates P-Rex1 in vivo, both in basal and PDGF (platelet-derived growth factor)- or LPA (lysophosphatidic acid)-stimulated cells. The phosphatase activity of PP1alpha is required for P-Rex1 activation. PP1beta, a close homologue of PP1alpha, is also able to activate P-Rex1, but less effectively. PP1alpha stimulates P-Rex1-mediated Rac-dependent changes in endothelial cell morphology. MS analysis of wild-type P-Rex1 and a PP1alpha-binding-deficient mutant revealed that endogenous PP1alpha dephosphorylates P-Rex1 on at least three residues, Ser834, Ser1001 and Ser1165. Site-directed mutagenesis of Ser1165 to alanine caused activation of P-Rex1 to a similar degree as did PP1alpha, confirming Ser1165 as a dephosphorylation site important in regulating P-Rex1 Rac-GEF activity. In summary, we have identified a novel mechanism for direct activation of P-Rex1 through PP1alpha-dependent dephosphorylation.