Cyclic AMP (cAMP) is produced by activation of Gs protein-coupled receptors and regulates many physiological processes through activation of protein kinase A (PKA). However, a large body of evidence indicates that cAMP also regulates specific cellular functions through PKA-independent pathways. Here, we show that a small GTPase of the Rho family, Rac, is regulated by cAMP in a PKA-independent manner. We also show that Rac activation results from activation of Rap1 through the cAMP guanine nucleotide-exchange factor (GEF) Epac1. Activation of the Gs-coupled serotonin 5-HT(4) receptor initiates this signalling cascade in various cell types. Furthermore, we demonstrate that crosstalk between the Ras and Rho GTPase families is involved in cAMP-dependent processing of amyloid precursor protein (APP), a key protein in Alzheimer's disease. Indeed, Epac1 regulates secretion of the non-amyloidogenic soluble form of APP (sAPPalpha) through Rap1 and Rac. Our data identify an unsuspected connection between two families of small GTPases and imply that Rac can function downstream of cAMP/Epac1/Rap1 in a novel signal transduction secretory pathway.