The Dock180 family of atypical Rho family guanine nucleotide exchange factors (Rho-GEFs) regulate a variety of processes involving cellular or subcellular polarization, including cell migration and phagocytosis. Each contains a Dock homology region-1 (DHR-1) domain that is required to localize its GEF activity to a specific membrane compartment where levels of phosphatidylinositol (3,4,5)-trisphosphate (PtdIns(3,4,5)P3) are up-regulated by the local activity of PtdIns 3-kinase. Here we define the structural and energetic bases of phosphoinositide specificity by the DHR-1 domain of Dock1 (a GEF for Rac1), and show that DHR-1 utilizes a C2 domain scaffold and surface loops to create a basic pocket on its upper surface for recognition of the PtdIns(3,4,5)P3 head group. The pocket has many of the characteristics of those observed in pleckstrin homology domains. We show that point mutations in the pocket that abolish phospholipid binding in vitro ablate the ability of Dock1 to induce cell polarization, and propose a model that brings together recent mechanistic and structural studies to rationalize the central role of DHR-1 in dynamic membrane targeting of the Rho-GEF activity of Dock180.