Rac1 is a small GTPase that regulates the actin cytoskeleton but also other cellular processes. To investigate the function of Rac1 in skin, we generated mice with a keratinocyte-restricted deletion of the rac1 gene. Rac1-deficient mice lost nearly all of their hair within a few weeks after birth. The nonpermanent part of mutant hair follicles developed constrictions; lost expression of hair follicle-specific keratins, E-cadherin, and α6 integrin; and was eventually removed by macrophages. The permanent part of hair follicles and the sebaceous glands were maintained, but no regrowth of full-length hair follicles was observed. In the skin of mutant mice, epidermal keratinocytes showed normal differentiation, proliferation, cell-cell contacts, and basement membrane deposition, demonstrating no obvious defects of Rac1-deficient epidermis in vivo. In vitro, Rac1-null keratinocytes displayed a strong spreading defect and slightly impaired adhesion. These data show that Rac1 plays an important role in sustaining the integrity of the lower part of hair follicles but not in maintenance of the epidermis.