A Rac GTPase–regulated multiprotein NADPH oxidase is critical for the formation of reactive oxygen species (ROS) in phagocytic leukocytes and other nonphagocytic cells. NADPH oxidase reduces molecular oxygen to form superoxide anion in a two-step process. Electrons are initially transferred from NADPH to cytochrome b–associated FAD, then to cytochrome b heme and finally to molecular oxygen. We show here that Rac is required for both electron-transfer reactions. Mutational and biophysical analysis shows that Rac and p67 phox independently regulate cytochrome b to catalyze the transfer of electrons from NADPH to FAD. However, they must interact with each other to induce the subsequent transfer of electrons from FAD to cytochrome b heme and molecular oxygen. This two-step model of regulation by Rac GTPase may provide a means of more effectively controlling the inflammatory responses of phagocytic leukocytes.