Small GTPases of the Rab family are specific regulators of intracellular vesicular traffic. Mutational analysis of Rab proteins suggests that it is the membrane-bound and GTP-bound form of the molecule that is active in vesicle docking or fusion. Since Rab proteins are also present in a cytosolic pool in the cell, it has been postulated that they recycle via a soluble intermediate to serve multiple rounds of vesicular traffic. Here we discuss our evidence for the involvement of Rab GDI (GDP-Dissociation Inhibitor) in the cycling of Rab proteins between the cytosol and the membrane. We find that Rab GDI is able to both dissociate Rab proteins from and deliver them to the membrane. Rab GDI-mediated membrane association of Rab proteins is a multistep mechanism which includes a nucleotide exchange reaction.