The RAC guanine nucleotide binding proteins regulate multiple biological activities, including actin polymerization, activation of the Jun kinase (JNK) cascade, and cell proliferation. RAC effector loop mutants were identified that separate the ability of RAC to interact with different downstream effectors. One mutant of activated human RAC protein, RAC^V12H40 (with valine and histidine substituted at position 12 and 40, respectively), was defective in binding to PAK3, a Ste20-related p21-activated kinase (PAK), but bound to POR1, a RAC-binding protein. This mutant failed to stimulate PAK and JNK activity but still induced membrane ruffling and mediated transformation. A second mutant, RAC^V12L37 (with leucine substituted at position 37), which bound PAK but not POR1, induced JNK activation but was defective in inducing membrane ruffling and transformation. These results indicate that the effects of RAC on the JNK cascade and on actin polymerization and cell proliferation are mediated by distinct effector pathways that diverge at the level of RAC itself.