Cortical γ-aminobutyric acid (GABA)ergic interneurons are characterized by extraordinary neurochemical and functional diversity. Although recent studies have uncovered some of the molecular components underlying interneuron development, including the cellular and molecular mechanisms guiding their migration to the cortex, the intracellular components involved are still unknown. Rac1, a member of the Rac subfamily of Rho-GTPases, has been implicated in various cellular processes such as cell cycle dynamics, axonogenesis, and migration. In this study, we have addressed the specific role of Rac1 in interneuron progenitors originating in the medial ganglionic eminence, via Cre/loxP technology. We show that ablation of Rac1 from Nkx2.1-positive progenitors, results in a migratory impairment. As a consequence, only half of GABAergic interneurons are found in the postnatal cortex. The rest remain aggregated in the ventral telencephalon and show morphological defects in their growing processes in vitro. Ablation of Rac1 from postmitotic progenitors does not result in similar defects, thus underlying a novel cell autonomous and stage-specific requirement for Rac1 activity, within proliferating progenitors of cortical interneurons. Rac1 is necessary for their transition from G1 to S phase, at least in part by regulating cyclin D levels and retinoblastoma protein phosphorylation.