Protein-protein interactions are essential for many cellular processes. We have developed a technology called light-activated dimerization (LAD) to artificially induce protein hetero- and homodimerization in live cells using light. Using the FKF1 and GIGANTEA (GI) proteins of Arabidopsis thaliana, we have generated protein tags whose interaction is controlled by blue light. We demonstrated the utility of this system with LAD constructs that can recruit the small G-protein Rac1 to the plasma membrane and induce the local formation of lamellipodia in response to focal illumination. We also generated a light-activated transcription factor by fusing domains of GI and FKF1 to the DNA binding domain of Gal4 and the transactivation domain of VP16, respectively, showing that this technology is easily adapted to other systems. These studies set the stage for the development of light-regulated signaling molecules for controlling receptor activation, synapse formation and other signaling events in organisms.