We found that rac specifically binds to a type I PtdIns-4-P 5-kinase and that both rac and Cdc42 in the activated forms associate with PI 3-kinase. The association of PI 3-kinase with rac was stimulated by PDGF in vivo. Rac is constitutively associated with a PtdIns-4-P 5-kinase and stimulates PtdIns-4,5-P2 production in permeabilized platelets. These data suggest a model in which the initial step in the activation of rac is release from rho GDI (Fig. 7). Rac in the GDP bound form can associate with the PtdIns-4-P 5-kinase and also interact with an exchange factor. GTP bound rac may then localize to sites of actin reorganization, bringing the PtdIns-4-P 5-kinase with it. Locally synthesized PtdIns-4,5-P2 binds to actin capping proteins, leading to their release and the production of actin free ends. Actin polymerization can then occur from the free ends. Many other factors must be involved to regulate the type and extent of actin polymerization that is necessary in such complex processes as cell movement and membrane ruffling. The rac-associated PtdIns-4-P 5-kinase and its product PtdIns-4,5-P2 may act at a crucial regulatory point that permits polymerization to begin.