Rac1b was recently identified in malignant colorectal tumors as an alternative splice variant of Rac1 containing a 19-amino acid insertion next to the switch II region. The structures of Rac1b in the GDP- and the GppNHp-bound forms, determined at a resolution of 1.75 A, reveal that the insertion induces an open switch I conformation and a highly mobile switch II. As a consequence, Rac1b has an accelerated GEF-independent GDP/GTP exchange and an impaired GTP hydrolysis, which is restored partially by GTPase-activating proteins. Interestingly, Rac1b is able to bind the GTPase-binding domain of PAK but not full-length PAK in a GTP-dependent manner, suggesting that the insertion does not completely abolish effector interaction. The presented study provides insights into the structural and biochemical mechanism of a self-activating GTPase.