In Saccharomyces cerevisiae, activation of Cdc42 by its guanine-nucleotide exchange factor Cdc24 triggers polarization of the actin cytoskeleton at bud emergence and in response to mating pheromones. The adaptor protein Bem1 localizes to sites of polarized growth where it interacts with Cdc42, Cdc24 and the PAK-like kinase Cla4. We have isolated Bem1 mutants (Bem1-m), which are specifically defective for binding to Cdc24. The mutations map within the conserved PB1 domain, which is necessary and sufficient to interact with the octicos peptide repeat (OPR) motif of Cdc24. Although Bem1-m mutant proteins localize normally, bem1-m cells are unable to maintain Cdc24 at sites of polarized growth. As a consequence, they are defective for apical bud growth and the formation of mating projections. Localization of Bem1 to the incipient bud site requires activated Cdc42, and conversely, expression of Cdc42-GTP is sufficient to accumulate Bem1 at the plasma membrane. Thus, our results suggest that Bem1 functions in a positive feedback loop: local activation of Cdc24 produces Cdc42-GTP, which recruits Bem1. In turn, Bem1 stabilizes Cdc24 at the site of polarization, leading to apical growth.