Dictyostelium RacH localizes predominantly to membranes of the nuclear envelope, endoplasmic reticulum and Golgi apparatus. To investigate the role of this protein, we generated knockout and overexpressor strains. RacH-deficient cells displayed 50% reduced fluid-phase uptake and a moderate exocytosis defect, but phagocytosis was unaffected. Detailed examination of the endocytic pathway revealed defective acidification of early endosomes and reduced secretion of acid phosphatase in the presence of sucrose. The distribution of the post-lysosomal marker vacuolin was altered, with a high proportion of cells showing a diffuse vesicular pattern in contrast to the wild-type strain, where few intensely stained vacuoles predominate. Cytokinesis, cell motility, chemotaxis and development appeared largely unaffected. In a cell-free system, RacH stimulates actin polymerization, suggesting that this protein is involved in actin-based trafficking of vesicular compartments. We also investigated the determinants of subcellular localization of RacH by expression of green-fluorescent-protein-tagged chimeras in which the C-terminus of RacH and the plasma-membrane-targeted RacG were exchanged, the insert region was deleted or the net positive charge of the hypervariable region was increased. We show that several regions of the molecule, not only the hypervariable region, determine targeting of RacH. Overexpression of mistargeted RacH mutants did not recapitulate the phenotypes of a strain overexpressing nonmutated RacH, indicating that the function of this protein is in great part related to its subcellular localization.