Fcgamma Receptor (FcR)-mediated phagocytosis by macrophages requires phosphatidylinositol 3-kinase (PI3K) and activation of the Rho-family GTPases Cdc42 and Rac1. Cdc42 is activated at the advancing edge of the phagocytic cup, where actin is concentrated, and is deactivated at the base of the cup. The timing of 3' phosphoinositide (3'PI) concentration changes in cup membranes suggests a role for 3'PIs in deactivation of Cdc42. This study examined the relationships between PI3K and the patterns of Rho-family GTPase signaling during phagosome formation. Inhibition of PI3K resulted in persistently active Cdc42 and Rac1, but not Rac2, in stalled phagocytic cups. Patterns of 3'PIs and Rho-family GTPase activities during phagocytosis of 5- and 2-mum-diameter microspheres indicated similar underlying mechanisms despite particle size-dependent sensitivities to PI3K inhibition. Expression of constitutively active Cdc42(G12V) increased 3'PI concentrations in plasma membranes and small phagosomes, indicating a role for Cdc42 in PI3K activation. Cdc42(G12V) inhibited phagocytosis at a later stage than inhibition by dominant negative Cdc42(N17). Together, these studies identified a Cdc42 activation cycle organized by PI3K, in which FcR-activated Cdc42 stimulates PI3K and actin polymerization, and the subsequent increase of 3'PIs in cup membranes inactivates Cdc42 to allow actin recycling necessary for phagosome formation.