The Rho-family GTPase, Cdc42, can regulate the actin cytoskeleton through activation of Wiskott–Aldrich syndrome protein (WASP) family members. Activation relieves an autoinhibitory contact between the GTPase-binding domain and the carboxy-terminal region of WASP proteins. Here we report the autoinhibited structure of the GTPase-binding domain of WASP, which can be induced by the C-terminal region or by organic co-solvents. In the autoinhibited complex, intramolecular interactions with the GTPase-binding domain occlude residues of the C terminus that regulate the Arp2/3 actin-nucleating complex. Binding of Cdc42 to the GTPase-binding domain causes a dramatic conformational change, resulting in disruption of the hydrophobic core and release of the C terminus, enabling its interaction with the actin regulatory machinery. These data show that ‘intrinsically unstructured’ peptides such as the GTPase-binding domain of WASP can be induced into distinct structural and functional states depending on context.