IQ motif– containing GTPase-activating proteins (IQGAPs) are scaffolding proteins playing central roles in cell– cell adhesion, polarity, and motility. The Rho GTPases Cdc42 and Rac1, in their GTP-bound active forms, interact with all three human IQGAPs. The IQGAP–Cdc42 interaction promotes metastasis by enhancing actin polymerization. However, despite their high sequence identity, Cdc42 and Rac1 differ in their interactions with IQGAP. Two Cdc42 molecules can bind to the Ex-domain and the RasGAP site of the GTPase-activating protein (GAP)related domain (GRD) of IQGAP and promote IQGAP dimerization. Only one Rac1 molecule might bind to the RasGAP site of GRD and may not facilitate the dimerization, and the exact mechanism of Cdc42 and Rac1 binding to IQGAP is unclear. Using all-atom molecular dynamics simulations, site-directed mutagenesis, and Western blotting, we unraveled the detailed mechanisms of Cdc42 and Rac1 interactions with IQGAP2. We observed that Cdc42 binding to the Ex-domain of GRD of IQGAP2 (GRD2) releases the Ex-domain at the C-terminal region of GRD2, facilitating IQGAP2 dimerization. Cdc42 binding to the Ex-domain promoted allosteric changes in the RasGAP site, providing a binding site for the second Cdc42 in the RasGAP site. Of note, the Cdc42 “insert loop” was important for the interaction of the first Cdc42 with the Ex-domain. By contrast, differences in Rac1 insert-loop sequence and structure precluded its interaction with the Ex-domain. Rac1 could bind only to the RasGAP site of apo-GRD2 and could not facilitate IQGAP2 dimerization. Our detailed mechanistic insights help decipher how Cdc42 can stimulate actin polymerization in metastasis.