Pericellular proteolysis by membrane-type 1 matrix metalloproteinase (MT1-MMP) plays a pivotal role in tumor cell invasion. Localization of MT1-MMP at the invasion front of cells, e.g. on lamellipodia and invadopodia, has to be regulated in coordination with reorganization of the actin cytoskeleton. However, little is known about how such invasion-related actin structures are regulated at the sites where MT1-MMP localizes. During analysis of MT1-MMP-associated proteins, we identified a heretofore uncharacterized protein. This protein, which we call p27RF-Rho, enhances activation of RhoA by releasing it from inhibition by p27(kip1) and thereby regulates actin structures. p27(kip1) is a well known cell cycle regulator in the nucleus. In contrast, cytoplasmic p27(kip1) has been demonstrated to bind GDP-RhoA and inhibit GDP-GTP exchange mediated by guanine nucleotide exchange factors. p27RF-Rho binds p27(kip1) and prevents p27(kip1) from binding to RhoA, thereby freeing the latter for activation. Knockdown of p27RF-Rho expression renders cells resistant to RhoA activation stimuli, whereas overexpression of p27RF-Rho sensitizes cells to such stimulation. p27RF-Rho exhibits a punctate distribution in invasive human tumor cell lines. Stimulation of the cells with lysophosphatidic acid induces activation of RhoA and induces the formation of punctate actin structures within foci of p27RF-Rho localization. Some of the punctate actin structures co-localize with MT1-MMP and cortactin. Down-regulation of p27RF-Rho prevents both redistribution of actin into the punctate structures and tumor cell invasion. Thus, p27RF-Rho is a new potential target for cancer therapy development.