The Rho-type GTPase Cdc42 is a central regulator of eukaryotic cell polarity and signal transduction. In budding yeast, Cdc42 regulates polarity and mitogen-activated protein (MAP) kinase signaling in part through the PAK-family kinase Ste20. Activation of Ste20 requires a Cdc42/Rac interactive binding (CRIB) domain, which mediates its recruitment to membrane-associated Cdc42. Here, we identify a separate domain in Ste20 that interacts directly with membrane phospholipids and is critical for its function. This short region, termed the basic-rich (BR) domain, can target green fluorescent protein to the plasma membrane in vivo and binds PIP(2)-containing liposomes in vitro. Mutation of basic or hydrophobic residues in the BR domain abolishes polarized localization of Ste20 and its function in both MAP kinase-dependent and independent pathways. Thus, Cdc42 binding is required but is insufficient; instead, direct membrane binding by Ste20 is also required. Nevertheless, phospholipid specificity is not essential in vivo, because the BR domain can be replaced with several heterologous lipid-binding domains of varying lipid preferences. We also identify functionally important BR domains in two other yeast Cdc42 effectors, Gic1 and Gic2, suggesting that cooperation between protein-protein and protein-membrane interactions is a prevalent mechanism during Cdc42-regulated signaling and perhaps for other dynamic localization events at the cell cortex.