THE GTPase Racl is a key component in the reorganization of the actin cytoskeleton that is induced by growth factors or oncogenic Ras¹. Here we investigate the role of Racl in cell transformation and show that Ratl fibroblasts expressing activated Val-12 Racl (Racl 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 Racl 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 car boxy-terminal localization signal from K-Ras. This indicates that Rac is essential for transformation by Ras. In addition, Val-12 Racl 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.