Glucocorticoid hormones stimulate adherens and tight junction formation in Con8 mammary epithelial tumor cells through a multistep process in which the membrane organization of structural apical junction proteins and tight junction sealing is controlled by specific signal transduction components. We have previously shown that dexamethasone stimulation of apical junction formation requires down-regulation of the small GTPase RhoA. Here we identified Rnd3/RhoE, a GTPase-deficient Rho family member and RhoA antagonist, as a key regulator of apical junction dynamics. Exogenously expressed Rnd3/RhoE co-localized with actin at the cell periphery and induced the localization of the adherens junction protein beta-catenin and the tight junction protein ZO-1 to sites of cell-cell contact, and led to the formation of highly sealed tight junctions. Treatment with glucocorticoids was not required to achieve complete apical junction remodeling. Consistent with Rnd3/RhoE acting as an antagonist of RhoA, expression of Rnd3/RhoE rescued the disruptive effects of constitutively active RhoA on apical junction organization. Our results demonstrate a new role for the Rho family member Rnd3/RhoE in regulating the assembly of the apical junction complex and tight junction sealing.