The Rho family of Ras-related proteins, which includes Rac1, RhoA, and Cdc42, is distinguished from other members of the Ras superfamily of small GTPases in that its members possess additional sequences positioned between beta-strand 5 and alpha-helix 4, designated the insert region. Previous studies have established the importance of an intact insert region for the transforming, but not actin cytoskeletal reorganization, activities of Cdc42 and RhoA. Similarly, the insert region was determined to be essential for Rac1-mediated mitogenesis. Additionally, an intact insert region was also determined to be required for the antiapoptotic activity of Rac1 as well as for Rac1 activation of reactive oxygen species and the NF-kappaB transcription factor. However, it has not been determined whether the insert region is important for Rac1-mediated growth transformation. In this study, we assessed the requirement for the insert region in Rac1 transformation and signaling in NIH 3T3 cells. Unexpectedly, we found that a mutant of constitutively activated Rac1 that lacked the insert region retained potent transforming activity. The insert region of Rac1 was dispensable for Rac1 stimulation of transcription from the cyclin D1 promoter and for activation of the c-Jun, NF-kappaB, and E2F-1 transcription factors but was essential for Rac1 induction of serum response factor activity. While an intact insert region was dispensable for inducing reactive oxygen species production in vivo, it was required for Rac1 induction of lamellipodia. When taken together, these results show that the insert region of Rac1 serves roles in regulating actin organization and cell growth that are distinct from those of the analogous regions of Cdc42 and RhoA and support its involvement in regulating specific downstream effector interactions.