We have previously shown that expression of active Rac1 and Cdc4Hs inhibits skeletal muscle cell differentiation. We show here, by bromodeoxyuridine incorporation and cyclin D1 expression, that the expression of active Rac1 and Cdc42Hs but not RhoA impairs cell cycle exit of L6 myoblasts cultured in differentiation medium. Furthermore, expression of activated forms of Rac1 and Cdc42Hs elicits the loss of cell contact inhibition and anchorage-dependent growth as measured by focus forming activity and growth in soft agar. RhoA was once again not found to have this effect. We found a constitutive Rac1 and Cdc42Hs activation in three human rhabdomyosarcoma-derived cell lines, one of the most common causes of solid tumours arising from muscle precursors during childhood. Finally, dominant negative forms of Rac1 and Cdc42Hs inhibit cell proliferation of the RD rhabdomyosarcoma cell line. These data suggest an important role for the small GTPases Rac1 and Cdc42Hs in the generation of skeletal muscle tumours.