Ral proteins (RalA and RalB) comprise a distinct family of Ras-related GTPases (Feig and Emkey, 1993). Recently, Ral-GDS, the exchange factor that activates Ral proteins, has been shown to bind specifically to the activated forms of RasH, R-Ras and Rap1A, in the yeast two-hybrid system. Here we demonstrate that although all three GTPases have the capacity to bind Ral-GDS in mammalian cells, only RasH activates Ral-GDS. Furthermore, although constitutively activated Ra1A does not induce oncogenic transformation on its own, its expression enhances the transforming activities of both RasH and Raf. Finally, a dominant inhibitory form of RalA suppresses the transforming activities of both RasH and Raf. These results demonstrate that activation of Ral-GDS and thus its target, Ral, constitutes a distinct downstream signaling pathway from RasH that potentiates oncogenic transformation.