Rac1 and RhoA are members of the Rho family of Ras-related proteins and function as regulators of actin cytoskeletal organization, gene expression, and cell cycle progression. Constitutive activation of Rac1 and RhoA causes tumorigenic transformation of NIH 3T3 cells, and their functions may be required for full Ras transformation. The effectors by which Rac1 and RhoA mediate these diverse activities, as well as the interrelationship between these events, remain poorly understood. Rac1 is distinct from RhoA in its ability to bind and activate the p65 PAK serine/threonine kinase, to induce lamellipodia and membrane ruffling, and to activate the c-Jun NH2-terminal kinase (JNK). To assess the role of PAK in Rac1 function, we identified effector domain mutants of Rac1 and Rac1-RhoA chimeric proteins that no longer bound PAK. Surprisingly, PAK binding was dispensable for Rac1-induced transformation and lamellipodium formation, as well as activation of JNK, p38, and serum response factor (SRF). However, the ability of Rac1 to bind to and activate PAK correlated with its ability to stimulate transcription from the cyclin D1 promoter. Furthermore, Rac1 activation of JNK or SRF, or induction of lamellipodia, was neither necessary nor sufficient for Rac1 transforming activity. Finally, the signaling pathways that mediate Rac1 activation of SRF or JNK were distinct from those that mediate Rac1 induction of lamellipodia. Taken together, these observations suggest that Rac1 regulates at least four distinct effector-mediated functions and that multiple pathways may contribute to Rac1-induced cellular transformation.