Guanine nucleotide exchange factor (GEF) is a multisubunit protein involved in the initiation of translation. Although numerous models have been proposed for its mechanism of action, none have been definitive. An assay dependent on GEF activity was developed using highly purified eukaryotic initiation factor 2 (eIF-2) and GEF from Ehrlich cells. GEF was considered in terms of an enzyme whose catalytic function was the exchange of eIF-2-bound [alpha-32P]GDP for unlabeled nucleotide. The turnover number of GEF at 37 degrees C, calculated on the basis of enzyme kinetic methods is 0.027 s, which is consistent with in vivo rates of protein synthesis. Moreover, kinetic data support an enzyme-substituted mechanism as the mode of GEF function. This mechanism proposes the existence of a GEF.eIF-2.GDP complex and excludes the possibility of two guanine nucleotide binding sites on eIF-2. An analogous mechanism has been recently reported for elongation factor Ts, suggesting the importance of this mechanism to protein synthesis. The mechanism of inhibition of GEF function by eIF-2 alpha phosphorylation has also been investigated. It has been generally assumed that the mechanism by which eIF-2(P) traps GEF is an excessively stable complex, from which GEF is released very slowly. Data presented here, however, reveal that eIF-2(P).GDP is a competitive inhibitor of GEF (rather than an irreversible inhibitor) competing with eIF-2.GDP for binding to GEF. Even though the eIF-2(P).GDP.GEF complex dissociates too rapidly to measure, GEF is trapped because it has at least 150-fold greater affinity for eIF-2(P).GDP than for eIF-2.GDP. The implications of competitive inhibition with respect to the mechanism of reversal of inhibition by an eIF-2(P) phosphatase are discussed.