Microglia are reactively activated by various environmental stimulations caused by brain injury or disease. Activated microglia exhibit morphological transformation, proliferation, migration, phagocytosis, and the production of bioactive molecules. Various molecules are reported and suggested to activate microglia. Among them, macrophage‐colony‐stimulating factor (M‐CSF) is considered one of the most convincing candidates responsible for maintaining activation properties of microglia. Therefore, the focus of the present study is on intracellular molecular events that arise downstream of M‐CSF stimulation. M‐CSF activates its receptor, Fms tyrosine kinase, and Fms sequentially activates a number of signaling molecules, including PI3K or phospholipase Cγ (PLCγ). Stimulation of continuing signaling cascades results in the activation of a small GTPase, Rac, the key molecule in microglia activation. Rac is known to be activated downstream of receptor tyrosine kinases and to regulate reorganization of the actin cytoskeleton, which profoundly underlies the above‐mentioned properties of activated microglia. Iba1, a macrophage/microglia‐specific calcium‐binding protein, was identified by our group and was shown to be involved in the Rac signaling pathway. Further, we introduce a novel signaling pathway in which Rac is activated, dependent on PLCγ and Iba1. However, to understand the molecular details of microglia activation, future work is required. GLIA 40:164–174, 2002. © 2002 Wiley‐Liss, Inc.