Membrane fusion is catalyzed by conserved proteins R, Qa, Qb, and Qc SNAREs, which form tetrameric RQaQbQc complexes between membranes; SNARE chaperones of the SM, Sec17/αSNAP, and Sec18/NSF families; Rab-GTPases (Rabs); and Rab effectors. Rabs are anchored to membranes by C-terminal prenyl groups, but can also function when anchored by an apolar polypeptide. Rabs are regulated by GTPase-activating proteins (GAPs), activating the hydrolysis of bound GTP. We have reconstituted fusion with pure components from yeast vacuoles including SNAREs, the HOPS (homotypic fusion and vacuole protein sorting) tethering and SNARE-assembly complex, and the Rab Ypt7, bound to membranes by either C-terminal prenyl groups (Ypt7-pr) or a recombinant transmembrane anchor (Ypt7-tm). We now report that HOPS-dependent fusion occurs with Ypt7 anchored by either means, but only Ypt7-pr requires GTP for activation and is inactive either with bound GDP or without bound guanine nucleotide. In contrast, Ypt7-tm is constitutively active for HOPS-dependent fusion, independent of bound guanine nucleotide. Fusion inhibition by the GAP Gyp1-46 is not limited to Ypt7-tm with bound GTP, indicating that this GAP has an additional mode of regulating fusion. Phosphorylation of HOPS by the vacuolar kinase Yck3 renders fusion strictly dependent on GTP-activated Ypt7, whether bound to membranes by prenyl or transmembrane anchor. The binding of GTP or GDP constitutes a selective switch for Ypt7, but with Ypt7-tm, this switch is only read by HOPS after phosphorylation to P-HOPS by its physiological kinase Yck3. The prenyl anchor of Ypt7 allows both HOPS and P-HOPS to be regulated by Ypt7-bound guanine nucleotide.