Members of the Rho/Rac/Cdc42 superfamily of GTPases and their upstream activators, guanine nucleotide exchange factors (GEFs) , have emerged as key regulators of actin and microtubule dynamics. In their GTP bound form, these proteins interact with downstream effector molecules that alter actin and microtubule behavior. During Drosophila embryogenesis, a Galpha subunit (Concertina) and a Rho-type guanine nucleotide exchange factor (DRhoGEF2) have been implicated in the dramatic epithelial-cell shape changes that occur during gastrulation and morphogenesis . Using Drosophila S2 cells as a model system, we show that DRhoGEF2 induces contractile cell shape changes by stimulating myosin II via the Rho1 pathway. Unexpectedly, we found that DRhoGEF2 travels to the cell cortex on the tips of growing microtubules by interaction with the microtubule plus-end tracking protein EB1. The upstream activator Concertina, in its GTP but not GDP bound form, dissociates DRhoGEF2 from microtubule tips and also causes cellular contraction. We propose that DRhoGEF2 uses microtubule dynamics to search for cortical subdomains of receptor-mediated Galpha activation, which in turn causes localized actomyosin contraction associated with morphogenetic movements during development.