The recent discovery that GTP linked to latex beads binds to microtubule ends suggested that nucleotide interactions at this site may play a role in regulating microtubule (MT) dynamics. Evidence for this was sought using DIC microscopy to analyze effects of the free GTP and GDP concentration on the rates of MT elongation and phase transition to rapid shortening (catastrophe, kc). That nucleotide can dissociate and thereby destabilize the plus end by forming nucleotide-free (apotubulin) subunits was indicated by an increase in kc from 0.001 to 0.05 s-1, when the free GTP concentration was reduced from 100 to 0.5 microM, during assembly with 15 microM tubulin--GTP subunits (TuT). That nucleotide can bind to the minus end was indicated by a nearly 5-fold decrease in the rate of elongation when the free GDP concentration was increased from 1.6 to 175 microM, during assembly with a mixture of 36 microM TuT and 54 microM TuD. Further evidence that nucleotide can bind to both ends was provided by the observation that with a mixture of 36 microM TuT and 54 microM TuD, kc was increased from 0.0036 to 0.05 s-1 at the plus end, and from 0.0005 to 0.005 s-1 at the minus end, when the free GDP concentration was increased from 1.6 to 175 microM. Our evidence for destabilization of microtubules by formation of apotubulin and by nucleotide exchange to form terminal TuD subunits suggests that microtubule dynamics can be regulated in cells by an exchange factor that generates apotubulin subunits, or by a GTPase activating protein that forms TuD subunits at microtubule ends.