Cytokinesis, the final stage of eukaryotic cell division, ensures the production of two daughter cells. It requires fine coordination between the plasma membrane and cytoskeletal networks, and it is known to be regulated by several intracellular proteins, including the small GTPase Rho and its effectors. In this study we provide evidence that the protein Nir2 is essential for cytokinesis. Microinjection of anti-Nir2 antibodies into interphase cells blocks cytokinesis, as it results in the production of multinucleate cells. Immunolocalization studies revealed that Nir2 is mainly localized in the Golgi apparatus in interphase cells, but it is recruited to the cleavage furrow and the midbody during cytokinesis. Nir2 colocalizes with the small GTPase RhoA in the cleavage furrow and the midbody, and it associates with RhoA in mitotic cells. Its N-terminal region, which contains a phosphatidylinositol transfer domain and a novel Rho-inhibitory domain (Rid), is required for normal cytokinesis, as overexpression of an N-terminal-truncated mutant blocks cytokinesis completion. Time-lapse videomicroscopy revealed that this mutant normally initiates cytokinesis but fails to complete it, due to cleavage furrow regression, while Rid markedly affects cytokinesis due to abnormal contractility. Rid-expressing cells exhibit aberrant ingression and ectopic cleavage sites; the cells fail to segregate into daughter cells and they form a long unseparated bridge-like cytoplasmic structure. These results provide new insight into the cellular functions of Nir2 and introduce it as a novel regulator of cytokinesis.