Cdc42Hs is a small GTPase of the Rho-subfamily, which regulates signaling pathways that influence cell morphology and polarity, cell-cycle progression and transcription. An essential role for Cdc42Hs in cell growth regulation has been suggested by the finding that the Dbl oncoprotein is an upstream activator-a guanine nucleotide exchange factor (GEF)-for Cdc42Hs, and that activated mutants of the closely related GTPases Rac and Rho are transforming. As we were unable to obtain significant over-expression of GTPase-defective Cdc42Hs mutants, we have generated a mutant, Cdc42Hs(F28L), which can undergo spontaneous GTP-GDP exchange while maintaining full GTPase activity, and thus should exhibit functional activities normally imparted by Dbl. In cultured fibroblasts, Cdc42Hs(F28L) activated the c-Jun kinase (JNK1) and stimulated filopodia formation. Cells stably expressing Cdc42Hs(F28L) also exhibited several hallmarks of transformation-reduced contact inhibition, lower dependence on serum for growth, and anchorage-independent growth. Our findings indicate that Cdc42Hs plays a role in cell proliferation, and is a likely physiological mediator of Dbl-induced transformation.