The Ras family of small GTPases includes three closely related proteins: H-, K-, and N-Ras. Ras proteins are involved in the transduction of signals elicited by activated surface receptors, acting as key components by relaying signals downstream through diverse pathways. Mutant, constitutively activated forms of Ras proteins are frequently found in cancer. While constitutive Ras activation induces oncogenic-like transformation in immortalized fibroblasts, it causes growth arrest in primary vertebrate cells. Induction of p53 and cyclin-dependent kinase inhibitors such as p15^INK4b, p16^INK4a, p19^ARF, and p21^WAF1 accounts for this response. Interestingly, while ras has usually been regarded as a transforming oncogene, the analysis of Ras function in most of the cellular systems studied so far indicates that the promotion of differentiation is the most prominent effect of Ras. While in some cell types, particularly muscle, Ras inhibits differentiation, in others such as neuronal, adipocytic, or myeloid cells, Ras induces differentiation, in some cases accompanied by growth arrest. Several possible mechanisms for the pleiotropic effects of Ras in animal cells are discussed.