It is known that ras gene was discovered as a transforming gene of rat sarcoma virus. This gene is conserved ubiquitously from yeast to human, and a dominant activating mutation of ras results in transformation in mammalian cells. Currently it is evident that ras gene regulates cell proliferation and differentiation. The gene product, ras p21, binds to GDP or GTP, and hydrolyzes GTP to GDP and Pi. The GTP-bound form is in active conformation which transmits signals to a downstream target. In this review, we focus on how the activity of ras p21 is regulated and on the mode of action of ras p21 in cell proliferation and differentiation.