Mammalian Vav signal transducer proteins couple receptor tyrosine kinase signals to the activation of the Rho/Rac GTPases, leading to cell differentiation and/or proliferation. The unique and complex structure of mammalian Vav proteins is preserved in the Drosophila melanogaster homologue, DroVav. We demonstrate that DroVav functions as a guanine-nucleotide exchange factor (GEF) for DRac. Drosophila cells overexpressing wild-type (wt) DroVav exhibited a normal morphology. However, overexpression of a truncated DroVav mutant (that functions as an oncogene when expressed in NIH3T3 cells) results in striking changes in the actin cytoskeleton, resembling those usually visible following Rac activation. Dominant-negative DRac abrogated these morphological changes, suggesting that the effect of the truncated DroVav mutant is mediated by activation of DRac. In Drosophila cells, we find that stimulation of the Drosophila EGF receptor (DER) increases tyrosine phosphorylation of DroVav, which in turn associates with tyrosine-phosphorylated DER. In addition, the following results imply that DroVav participates in downstream DER signalling, such as ERK phosphorylation: (a) overexpression of DroVav induces ERK phosphorylation; and (b) 'knockout' of DroVav by RNA interference blocks ERK phosphorylation induced by DER stimulation. Unlike mammalian Vav proteins, DroVav was not found to induce Jnk phosphorylation under the experimental circumstances tested in fly cells. These results establish the role of DroVav as a signal transducer that participates in receptor tyrosine kinase pathways and functions as a GEF for the small RhoGTPase, DRac.