Hepatocyte growth factor (HGF), the ligand for the Met receptor tyrosine kinase, is a potent modulator of epithelial-mesenchymal transition and dispersal of epithelial cells, processes that play crucial roles in tumor development, invasion, and metastasis. Little is known about the Met-dependent proximal signals that regulate these events. We show that HGF stimulation of epithelial cells leads to activation of the Rho GTPases, Cdc42 and Rac, concomitant with the formation of filopodia and lamellipodia. Notably, HGF-dependent activation of Rac but not Cdc42 is dependent on phosphatidylinositol 3-kinase. Moreover, HGF-induced lamellipodia formation and cell spreading require phosphatidylinositol 3-kinase and are inhibited by dominant negative Cdc42 or Rac. HGF induces activation of the Cdc42/Rac-regulated p21-activated kinase (PAK) and c-Jun N-terminal kinase, and translocation of Rac, PAK, and Rho-dependent Rho-kinase to membrane ruffles. Use of dominant negative and activated mutants reveals an essential role for PAK but not Rho-kinase in HGF-induced epithelial cell spreading, whereas Rho-kinase activity is required for the formation of focal adhesions and stress fibers in response to HGF. We conclude that PAK and Rho-kinase play opposing roles in epithelial-mesenchymal transition induced by HGF, and provide new insight regarding the role of Cdc42 in these events.