FGD1 mutations result in Faciogenital Dysplasia (FGDY), an X-linked human disease that affects skeletal formation and embryonic morphogenesis. FGD1 and Fgd1, the mouse FGD1 ortholog, encode guanine nucleotide exchange factors (GEF) that specifically activate Cdc42, a Rho GTPase that controls the organization of the actin cytoskeleton. To further understand FGD1/Fgd1 signaling and begin to elucidate the molecular pathophysiology of FGDY, we demonstrate that Fgd1 directly interacts with cortactin and mouse actin-binding protein 1 (mAbp1), actin-binding proteins that regulate actin polymerization through the Arp2/3 complex. In yeast two-hybrid studies, cortactin and mAbp1 Src homology 3 (SH3) domains interact with a single Fgd1 SH3-binding domain (SH3-BD), and biochemical studies show that the Fgd1 SH3-BD directly binds to cortactin and mAbp1 in vitro. Immunoprecipitation studies show that Fgd1 interacts with cortactin and mAbp1 in vivo and that Fgd1 SH3-BD mutations disrupt binding. Immunocytochemical studies show that Fgd1 colocalizes with cortactin and mAbp1 in lamellipodia and membrane ruffles, and that Fgd1 subcellular targeting is dynamic. By using truncated cortactin proteins, immunocytochemical studies show that the cortactin SH3 domain targets Fgd1 to the subcortical actin cytoskeleton, and that abnormal Fgd1 localization results in actin cytoskeletal abnormalities and significant changes in cell shape and viability. Thus, this study provides novel in vitro and in vivo evidence that Fgd1 specifically and directly interacts with cortactin and mAbp1, and that these interactions play an important role in regulating the actin cytoskeleton and, subsequently, cell shape.