Cdc42 is a small GTPase of the Rho family which regulates the formation of actin filaments to generate filopodia,. Although there are several proteins such as PAK, ACK and WASP (Wiskott–Aldrich syndrome protein) that bind Cdc42 directly, none of these can account for the filopodium formation induced by Cdc42. Here we demonstrate that before it can induce filopodium formation, Cdc42 must bind a WASP-related protein, N-WASP, that is richest in neural tissues but is expressed ubiquitously. N-WASP induces extremely long actin microspikes only when co-expressed with active Cdc42, whereas WASP, which is expressed in haematopoietic cells, does not, despite the structural similarities between WASP and N-WASP. In a cell-free system, addition of active Cdc42 significantly stimulates the actin-depolymerizing activity of N-WASP, creating free barbed ends from which actin polymerization can then take place. This activation seems to be caused by exposure of N-WASP's actin-depolymerizing region induced by Cdc42 binding.