LRRK2 kinase mutations cause familial Parkinson’s disease and increased phosphorylation of a subset of Rab GTPases. Rab29 recruits LRRK2 to the trans-Golgi and activates it there, yet some of LRRK2’s major Rab substrates are not on the Golgi. We sought to characterize the cell biology of LRRK2 activation. Unlike other Rab family members, we show that Rab29 binds nucleotide weakly, is poorly prenylated, and is not bound to GDI in the cytosol; nevertheless, Rab29 only activates LRRK2 when it is membrane bound and GTP bound. Mitochondrially anchored, GTP-bound Rab29 is both a LRRK2 substrate and activator, and it drives accumulation of active LRRK2 and phosphorylated Rab10 on mitochondria. Importantly, mitochondrially anchored LRRK2 is much less capable of phosphorylating plasma membrane–anchored Rab10 than soluble LRRK2. These data support a model in which LRRK2 associates with and dissociates from distinct membrane compartments to phosphorylate Rab substrates; if anchored, LRRK2 can modify misdelivered Rab substrates that then become trapped there because GDI cannot retrieve them.