The precise biological role of Thy-1, a glycophosphatidyl-inositol (GPI)-linked cell surface glycoprotein in non-caveolar lipid raft microdomains, remains enigmatic. Evidence suggests that Thy-1 affects intracellular signaling through src-family protein kinases, and modulates adhesive and migratory events, such as thymocyte adhesion and neurite extension. Primary fibroblasts sorted based on presence or absence of cell surface Thy-1 display strikingly distinct morphologies and differ with respect to production of and response to cytokines and growth factors. It is unclear the extent to which Thy-1 mediates these differences. Findings reported here indicate a novel role for Thy-1 in regulating the activity of Rho GTPase, a critical regulator of cellular adhesion and cytoskeletal organization. Endogenous or heterologous Thy-1 expression promotes focal adhesion and stress fiber formation, characteristic of increased Rho GTPase activity, and inhibits migration. Immunoblotting following transfection of RFL6 fibroblasts with Thy-1 demonstrates that Thy-1 expression inhibits src-family protein tyrosine kinase (SFK) activation, resulting in decreased phosphorylation of p190 Rho GTPase-activating protein (GAP). This results in a net increase in active Rho, and increased stress fibers and focal adhesions. We therefore conclude that Thy-1 surface expression regulates fibroblast focal adhesions, cytoskeletal organization and migration by modulating the activity of p190 RhoGAP and Rho GTPase.