The Rho Family GTPases are a tightly regulated class of signaling proteins that control a number of important cellular processes. Known most prominently for their ability to remodel the actin cytoskeleton in mammalian cells, this family has been shown to play essential roles in cell migration, epithelial cell polarization, phagocytosis, secretion, and cell cycle progression. These outcomes occur in many different subcellular locations and, as such, they require the GTPase to be able to quickly access them. Rho Guanine nucleotide Dissociation Inhibitor (Rho-GDI) is a ubiquitously expressed protein that stimulates the removal of Rho family GTPases from membranes and has been shown to be important in regulating their localization. This study employs a novel FRET assay to reconstitute Rho family GTPase interactions with GDI at the membrane surface. Cdc42 was loaded with fluorescently labeled guanine nucleotides (Mant-nucleotides) and inserted into fluorescein labeled membranes that can quench Mant fluorescence by FRET. GDI's removal of Cdc42-bound Mant-nucleotide from the proximity of acceptor labeled lipids was demonstrated by the complete restoration of Mant fluorescence upon GDI addition. This assay is able to provide detailed kinetic information and shed light on the molecular basis of the Cdc42's interaction with GDI. Additionally, we are able to probe the nature of the interaction between Cdc42 and the membrane surface, using liposomes of variable lipid composition. Here, we demonstrate a direct role for PIP2 on Cdc42's affinity for membranes and we identify the residues of Cdc42 that are receptive to this lipid, providing a more detailed understanding of Cdc42's behavior at the membrane surface in living cells.