Three decades of research have documented the spatiotemporal dynamics of RHO family GTPase membrane extraction regulated by guanine nucleotide dissociation inhibitors (GDIs), but the interplay of the kinetic mechanism and structural specificity of these interactions is as yet unresolved. To address this, we reconstituted the GDI-controlled spatial segregation of geranylgeranylated RHO protein RAC1 in vitro. Various biochemical and biophysical measurements provided unprecedented mechanistic details for GDI function with respect to RHO protein dynamics. We determined that membrane extraction of RHO GTPases by GDI occurs via a 3-step mechanism: (1) GDI non-specifically associates with the switch regions of the RHO GTPases; (2) an electrostatic switch determines the interaction specificity between the C-terminal polybasic region of RHO GTPases and two distinct negatively-charged clusters of GDI1; (3) a non-specific displacement of geranylgeranyl moiety from the membrane sequesters it into a hydrophobic cleft, effectively shielding it from the aqueous milieu. This study substantially extends the model for the mechanism of GDI-regulated RHO GTPase extraction from the membrane, and could have implications for clinical studies and drug development.