The Rho subfamily of small GTP-binding proteins mediates many fundamental cellular functions. The commonly studied members (Rho, Rac, and CDC42) regulate actin reorganization, affecting diverse cellular responses, including adhesion, cytokinesis, and motility. Another major function of the Rho GTPases is their role in regulating transcriptional factors and nuclear signaling. RhoH is encoded by a hematopoiesis-specific Rho-related gene recently identified in a fusion transcript with bcl6 in lymphoma cell lines. Significantly, translocations and a high frequency of RhoH mutation have been detected in primary lymphoma cells. We show here that RhoH functions differently from other Rho GTPases. RhoH exerts no significant effect on actin reorganization. However, RhoH is a potent inhibitor of the activation of NFkappaB and p38 by other Rho GTPases. This property, together with the differential expression of RhoH in the Th1 subset of T cells, suggests a role for RhoH in the functional differentiation of T cells. RhoH has different amino acids in two highly conserved residues critical for GTPase activity. Consequently, RhoH is GTPase deficient, remaining in a GTP-bound activated state without cycling. Reduction of RhoH levels in T cells augments the response to Rac activation. Furthermore, RhoH is dramatically down regulated after phorbol myristate acetate treatment and in Th1 cells after activation by anti-CD3. Hence, a mechanism for regulation of RhoH function is likely to exist at the transcriptional level. The inhibitory function of RhoH supports a model in which Rho GTPases with opposing functions may compete to modulate the final outcome of a particular GTPase-activated pathway.