The Ras-GAP related protein IQGAP1 binds several proteins, including actin, calmodulin, E-cadherin and the Rho family GTPase Cdc42. To gain insight into its in vivo function, IQGAP1 was overexpressed in mammalian cells. Transfection of IQGAP1 significantly increased the levels of active, GTP-bound Cdc42, resulting in the formation of peripheral actin microspikes. By contrast, transfection of an IQGAP1 mutant lacking part of the GAP-related domain (IQGAP1deltaGRD) substantially decreased the amount of GTP-bound Cdc42 in cell lysates. Consistent with these findings, IQGAP1DeltaGRD blocked Cdc42 function in cells that stably overexpress constitutively active Cdc42 and abrogated the effect of bradykinin on Cdc42. In cells transfected with IQGAP1deltaGRD, bradykinin was unable to activate Cdc42, translocate Cdc42 to the membrane fraction, or induce filopodia production. IQGAP1deltaGRD transfection altered cellular morphology, producing small, round cells that closely resemble Cdc42-/- cells. Some insight into the mechanism was provided by in vitro analysis, which revealed that IQGAP1deltaGRD increased the intrinsic GTPase activity of Cdc42, thereby increasing the amount of inactive, GDP-bound Cdc42. These data imply that IQGAP1 has a crucial role in transducing Cdc42 signaling to the cytoskeleton.