Brag2, a Sec7 domain (sec7d)-containing guanine nucleotide exchange factor, regulates cell adhesion and tumor cell invasion. Brag2 catalyzes nucleotide exchange, converting Arf·GDP to Arf·GTP. Brag2 contains a pleckstrin homology (PH) domain, and its nucleotide exchange activity is stimulated by phosphatidylinositol 4,5-bisphosphate (PIP2). Here we determined kinetic parameters for Brag2 and examined the basis for regulation by phosphoinositides. Using myristoylated Arf1·GDP as a substrate, the kcat was 1.8 ± 0.1/s as determined by single turnover kinetics, and the Km was 0.20 ± 0.07 μM as determined by substrate saturation kinetics. PIP2 decreased the Km and increased the kcat of the reaction. The effect of PIP2 required the PH domain of Brag2 and the N terminus of Arf and was largely independent of Arf myristoylation. Structural analysis indicated that the linker between the sec7d and the PH domain in Brag2 may directly contact Arf. In support, we found that a Brag2 fragment containing the sec7d and the linker was more active than sec7d alone. We conclude that Brag2 is allosterically regulated by PIP2 binding to the PH domain and that activity depends on the interdomain linker. Thus, the PH domain and the interdomain linker of Brag2 may be targets for selectively regulating the activity of Brag2.