Interferon-γ pre-exposure inhibits Rac activation by either integrin engagement or platelet-derived growth factor treatment. Interferon-γ does this by inducing expression of the large guanosine triphosphatase (GTPase) mouse guanylate-binding protein (mGBP-2). Inhibiting Rac results in the retardation of cell spreading. Analysis of variants of mGBP-2 containing amino acid substitutions in the guanosine triphosphate (GTP) binding domain suggests that GTP binding, and possibly dimerization, of mGBP-2 is necessary to inhibit cell spreading. However, isoprenylation is also required. Removal of the N-terminal GTP-binding globular domain from mGBP-2 yields a protein with only the extended C-terminal α-helices that lacks enzymatic activity. The ability of the C-terminal α-helices alone to inhibit cell spreading suggests that this is the domain that interacts with the downstream effectors of mGBP-2. Interestingly, mGBP-2 can inhibit cell spreading whether it is geranylgeranylated or farnesylated. This study begins to define the properties of mGBP-2 responsible for inhibiting cell spreading.