Although RhoA activity is necessary for promoting myogenic mesenchymal stem cell fates, recent studies in cultured cells suggest that down-regulation of RhoA activity in specified myoblasts is required for subsequent differentiation and myotube formation. However, whether this phenomenon occurs in vivo and which Rho modifiers control these later events remain unclear. We found that expression of the Rho-GTPase-activating protein, GRAF1, was transiently up-regulated during myogenesis, and studies in C2C12 cells revealed that GRAF1 is necessary and sufficient for mediating RhoA down-regulation and inducing muscle differentiation. Moreover, forced expression of GRAF1 in pre-differentiated myoblasts drives robust muscle fusion by a process that requires GTPase-activating protein-dependent actin remodeling and BAR-dependent membrane binding or sculpting. Moreover, morpholino-based knockdown studies in Xenopus laevis determined that GRAF1 expression is critical for muscle development. GRAF1-depleted embryos exhibited elevated RhoA activity and defective myofibrillogenesis that resulted in progressive muscle degeneration, defective motility, and embryonic lethality. Our results are the first to identify a GTPase-activating protein that regulates muscle maturation and to highlight the functional importance of BAR domains in myotube formation.