Rab proteins are geranylgeranylated on one or two C-terminal cysteines by Rab geranylgeranyl transferase (RabGGTase). The reaction is dependent on a Rab-binding protein, termed Rab escort protein (REP). Here, we studied the role of REP in the geranylgeranylation reaction. We first characterized the interaction between REP and ungeranylgeranylated Rab using analytical ultracentrifugation and a fluorescence-based assay. We measured an equilibrium dissociation constant of 0.2 μM for the formation of a 1:1 REP−Rab complex and showed that this interaction relies mostly on ionic bonds and does not involve the two C-terminal cysteine residues. Second, we show that REP is required for recognition of Rab by RabGGTase and therefore that the REP−Rab complex is the true substrate for RabGGTase. Third, we show that free REP inhibits the geranylgeranylation reaction, suggesting that the complex is recognized by RabGGTase primarily via a REP-binding site. Our data suggest a model whereby REP behaves kinetically as an essential activator of the reaction.