Target of rapamycin complex-2 (TORC2), a conserved protein kinase complex, is an indispensable regulator of plasma membrane homeostasis. In budding yeast (Saccharomyces cerevisiae), the essential downstream effector of TORC2 is protein kinase Ypk1 and its paralog Ypk2. Muk1, a Rab5-specific guanine nucleotide exchange factor (GEF), was identified in our prior global screen for candidate Ypk1 targets. We confirm here that Muk1 is a substrate of Ypk1 and demonstrate that Ypk1-mediated phosphorylation stimulates Muk1 function in vivo. Strikingly, yeast lacking its two Rab5 GEFs (Muk1 and Vps9) or its three Rab5 paralogs (Vps21/Ypt51, Ypt52, and Ypt53) or overexpressing Msb3, a Rab5-directed GTPase-activating protein, all exhibit pronounced reduction in TORC2-mediated phosphorylation and activation of Ypk1. Vps21 coimmunoprecipitates with TORC2, and immuno-enriched TORC2 is less active in vitro in the absence of Rab5 GTPases. Thus, TORC2-dependent and Ypk1-mediated activation of Muk1 provides a control circuit for positive (self-reinforcing) up-regulation to sustain TORC2-Ypk1 signaling.