TGFbeta is a potent regulator of cell differentiation in many cell types. On aortic endothelial cells, TGFbeta1 displays angiogenic properties in inducing capillary-like tube formation in collagen I gels, in vitro. We investigated cytoskeletal changes that precede tube formation and related these alterations to the effects of TGFbeta1 on the activation state of members of the RhoGTPase family. TGFbeta1 promotes cell elongation and stress fiber formation in aortic endothelial cells. Using cell lines with inducible expression of Rac1 mutants, we show that these events are mimicked by expression of dominant-negative Rac1 whereas the constitutively active mutant prevents the TGFbeta1-mediated change of phenotype. Although TGFbeta1 induces an initial rise in the Rac1-GTP content, this phase is followed by a prolonged loss of the active form. In contrast, RhoA activity increases progressively and reaches a plateau when Rac1-GTP is no longer detectable. Prolonged inhibition of Rac1 appears necessary and sufficient for the increase in RhoA-GTP. In situ examination of Rho activity in TGFbeta1-treated cells provides evidence that active RhoA relocalizes to the tips of elongated cells. Inhibiting the Rho effector ROCK abrogates tube formation. Thus, Rac1 and RhoA are regulated by TGFbeta1 in the process of endothelial tube formation in collagen I gels.