Polarized cell growth requires a polarized organization of the actin cytoskeleton. Small GTP-binding proteins of the Rho-family have been shown to be involved in the regulation of actin polarization as well as other processes. Hyphal growth in filamentous fungi represents an ideal model to investigate mechanisms involved in generating cell polarity and establishing polarized cell growth. Since a potential role of Rho-proteins has not been studied so far in filamentous fungi we isolated and characterized the Ashbya gossypii homologs of the Saccharomyces cerevisiae CDC42, CDC24, RHO1, and RHO3 genes. The AgCDC42 and AgCDC24 genes can both complement conditional mutations in the S. cerevisiae CDC42 and CDC24 genes and both proteins are required for the establishment of actin polarization in A. gossypii germ cells. Agrho1 mutants show a cell lysis phenotype. Null mutant strains of Agrho3 show periodic swelling of hyphal tips that is overcome by repolarization and polar hyphal growth in a manner resembling the germination pattern of spores. Thus different Rho-protein modules are required for distinct steps during polarized hyphal growth of A. gossypii.