RhoA and Rac play key and opposite roles during neuronal polarization. We now show that Lfc, a guanosine nucleotide exchange factor (GEF), localizes to the Golgi apparatus and growth cones of developing neurons and negatively regulates neurite sprouting and axon formation through a Rho signaling pathway. Tctex-1, a dynein light chain implicated in axon outgrowth by modulating actin dynamics and Rac activity, colocalizes and physically interacts with Lfc, thus inhibiting its GEF activity, decreasing Rho-GTP levels, and functionally antagonizing Lfc during neurite formation.