Activation of Rac1 GTPase signaling is stimulated by phosphorylation and release of RhoGDI by the effector p21-activated kinase 1 (PAK1), but it is unclear what initiates this potential feed-forward mechanism for regulation of Rac activity. Phosphatidic acid (PA), which is produced from the lipid second messenger diacylglycerol (DAG) by the action of DAG kinases (DGKs), is known to activate PAK1. Here, we investigated whether PA produced by DGKzeta initiates RhoGDI release and Rac1 activation. In DGKzeta-deficient fibroblasts PAK1 phosphorylation and Rac1-RhoGDI dissociation were attenuated, leading to reduced Rac1 activation after platelet-derived growth factor stimulation. The cells were defective in Rac1-regulated behaviors, including lamellipodia formation, membrane ruffling, migration, and spreading. Wild-type DGKzeta, but not a kinase-dead mutant, or addition of exogenous PA rescued Rac activation. DGKzeta stably associated with PAK1 and RhoGDI, suggesting these proteins form a complex that functions as a Rac1-selective RhoGDI dissociation factor. These results define a pathway that links diacylglycerol, DGKzeta, and PA to the activation of Rac1: the PA generated by DGKzeta activates PAK1, which dissociates RhoGDI from Rac1 leading to changes in actin dynamics that facilitate the changes necessary for cell motility.