THE GTPase Rac(1) is a key component in the reorganization of the actin cytoskeleton that is induced by growth factors or oncogenic Ras(1). Here we investigate the role of Rac(1) in cell transformation and show that Rat(1) fibroblasts expressing activated Val-12 Rac(1) (Rac(1) with valine at residue 12) display all the hallmarks of malignant transformation. In a focus-forming assay in NIH3T3 fibroblasts to measure the efficiency of transformation, we found that dominant-negative Asn-17 Rac(1) inhibited focus formation by oncogenic Ras, but not by RafCAAX, a Raf kinase targeted to the plasma membrane by virtue of the addition of a carboxyterminal localization signal from K-Ras. This indicates that Rac is essential for transformation by Ras. In addition, Val-12 Rac(1) synergizes strongly with RafCAAX in focus-formation assays, indicating that oncogenic Ras drives both the Rac and MAP-kinase pathways, which cooperate to cause transformation.