The Rho family GTPase Cdc42 regulates cytoskeletal organization and membrane trafficking in physiological processes such as cell proliferation, motility and polarity. Aberrant activation of Cdc42 results in pathogenesis, such as tumorigenesis and tumor progression, cardiovascular diseases, diabetes, and neuronal degenerative diseases. The activation of Cdc42 in response to upstream signals is mediated by guanine nucleotide exchange factors (GEFs), which converse GDP-bound inactive form to the GTP-bound active form of Cdc42. The activated Cdc42 transduces signals to downstream effectors and generates cellular effects. This review will discuss the molecular mechanism of activation of Cdc42 and postulate that signaling specificity of Cdc42 is conferred by the GEF/GTPase/Effector (GGE) complexes in response to external stimuli.