The HIV-1 protein Nef's ability to induce cytoskeleton changes in infected host cells is a key event in viral replication. In renal podocytes, we found that Nef induced loss of stress fibers and increased lamellipodia, pathological changes leading to proteinuria in HIV-associated nephropathy. These morphological changes were mediated by Nef-induced Rac1 activation and RhoA inhibition. We identified a new interaction between Nef and diaphanous interacting protein (DIP), a recently described regulator of Rho and Rac signaling. We found that the SH3 binding domain of DIP and the Nef PxxP motif were required for this interaction. Nef also interacts with Vav2 in podocytes. DIP and Vav2 both interact directly with Nef in a competitive manner. DIP interacts with p190RhoGAP, and intact DIP was required for Nef induced phosphorylation of p190RhoGAP. DIP also interacts with Vav2, and though DIP enhanced baseline phosphorylation of Vav2, it was not required for Nef induced Vav2 activation. In Nef-infected podocytes, Src kinase induces phosphorylation of DIP, p190RhoGAP, and Vav2 leading to RhoA inhibition and Rac1 activation. Inhibition of the Nef-induced signaling pathway by using dominant negative of either Src or DIP, or siRNA for DIP, or p190RhoAGAP, restored RhoA activity and stress fiber formation in Nef-infected podocytes whereas siRNA for Vav2 reduced Rac1 activity and formation of lamellipodia. We conclude that in HIV-infected podocytes Nef, through the recruitment of DIP and p190RhoAGAP to Nef-Src complex, activates p190RhoAGAP and down regulates RhoA activity.