Constitutively activated mutants of the Ras-related protein TC21/R-Ras2 cause tumorigenic transformation of NIH3T3 cells. However, unlike Ras, TC21 fails to bind to and activate the Raf-1 serine-threonine kinase. Thus, whereas Ras transformation is critically dependent on Raf-1 TC21 activity is promoted by activation of Raf-independent signaling pathways. In the present study, we have further compared the functions of Ras and TC21. First we determined the basis for the inability of TC21 to activate Raf-1. Whereas Ras can interact with the two distinct Ras-binding sequences in NH2-terminus of Raf-1, designated RBS1 and Raf-Cys, TC21 could only bind Raf-Cys. Thus, the inability of TC21 to bind to RBS1 may prevent it from promoting the translocation of Raf-1 to the plasma membrane. Second, we found that TC21 is an activator of the JNK and p38, but not ERK, mitogen-activated protein kinase cascades and that TC21 transforming activity was dependent on Rac function. Thus, like Ras, TC21 may activate a Rac/JNK pathway. Third, we determined if TC21 could cause the same biological consequences as Ras in three distinct cell types. Like Ras, activated TC21 caused transformation of RIE-1 rat intestinal epithelial cells and terminal differentiation of PC12 pheochromocytoma cells. Finally, activated TC21 blocked serum starvation-induced differentiation of C2 myoblasts, whereas dominant negative TC21 greatly accelerated this differentiation process. Therefore, TC21 and Ras share indistinguishable biological activities in all cell types that we have evaluated. These results support the importance of Raf-independent pathways in mediating the actions of Ras and TC21.