Signaling events mediated by Rho family GTPases orchestrate cytoskeletal dynamics and cell junction formation. The activation of Rho GTPases is tightly regulated by guanine-nucleotide-exchange factors (GEFs). In this study, we identified a novel Rho-specific GEF called TEM4 (tumor endothelial marker 4) that associates with multiple members of the cadherin-catenin complex and with several cytoskeleton-associated proteins. Depending on confluence, TEM4 localized to either actin stress fibers or areas of cell-cell contact. The junctional localization of TEM4 was independent of actin binding. Depletion of endogenous TEM4 by shRNAs impaired Madin-Darby canine kidney (MDCK) and human umbilical vein endothelial cell (HUVEC) cell junctions, disrupted MDCK acini formation in 3D culture and negatively affected endothelial barrier function. Taken together, our findings implicate TEM4 as a novel and crucial junctional Rho GEF that regulates cell junction integrity and epithelial and endothelial cell function.