Breast carcinoma cells use specialized, actin-rich protrusions called invadopodia to degrade and invade through the extracellular matrix. Phosphorylation of the actin nucleation–promoting factor and actin-stabilizing protein cortactin downstream of the epidermal growth factor receptor–Src-Arg kinase cascade is known to be a critical trigger for invadopodium maturation and subsequent cell invasion in breast cancer cells. The functions of cortactin phosphorylation in this process, however, are not completely understood. We identify the Rho-family guanine nucleotide exchange factor Vav2 in a comprehensive screen for human SH2 domains that bind selectively to phosphorylated cortactin. We demonstrate that the Vav2 SH2 domain binds selectively to phosphotyrosine-containing peptides corresponding to cortactin tyrosines Y421 and Y466 but not to Y482. Mutation of the Vav2 SH2 domain disrupts its recruitment to invadopodia, and an SH2-domain mutant form of Vav2 cannot support efficient matrix degradation in invasive MDA-MB-231 breast cancer cells. We show that Vav2 function is required for promoting invadopodium maturation and consequent actin polymerization, matrix degradation, and invasive migratory behavior. Using biochemical assays and a novel Rac3 biosensor, we show that Vav2 promotes Rac3 activation at invadopodia. Rac3 knockdown reduces matrix degradation by invadopodia, whereas a constitutively active Rac3 can rescue the deficits in invadopodium function in Vav2-knockdown cells. Together these data indicate that phosphorylated cortactin recruits Vav2 to activate Rac3 and promote invadopodial maturation in invasive breast cancer cells.