The Legionella pneumophila effector protein RalF functions as a guanine nucleotide exchange factor (GEF) that activates the host small GTPase protein ADP-ribosylation factor (Arf), and recruits this host protein to the vacuoles in which this pathogen resides. GEF activity is conferred by the Sec7 domain located in the N-terminal region of RalF. Structural studies indicate that the C-terminal region of RalF makes contacts with residues in the Sec7 domain important for Arf interactions. Theoretically, the C-terminal region of RalF could prevent nucleotide exchange activity by blocking the ability of Arf to interact with the Sec7 domain. For this reason, the C-terminal region of RalF has been termed a capping domain. Here, the role of the RalF capping domain was investigated by comparing biochemical and effector activities mediated by this domain in both the Legionella RalF protein (LpRalF) and in a RalF ortholog isolated from the unrelated intracellular pathogen Rickettsia prowazekii (RpRalF). These data indicate that both RalF proteins contain a functional Sec7 domain and that the capping domain regulates RalF GEF activity. The capping domain has intrinsic determinants that mediate localization of the RalF protein inside of host cells and confer distinct effector activities. Localization mediated by the capping domain of LpRalF enables the GEF to modulate membrane transport in the secretory pathway, whereas, the capping domain of RpRalF enables this bacterial GEF to modulate actin dynamics occurring near the plasma membrane. Thus, these data reveal that divergence in the function of the C-terminal capping domain alters the in vivo functions of the RalF proteins.