Here we show a requirement for the Cdc42 and Rac1 GTPases in endothelial cell (EC) morphogenesis in three-dimensional extracellular matrices. Cdc42 and Rac1 specifically regulate EC intracellular vacuole and lumen formation in both collagen and fibrin matrices. Clostridium difficile toxin B(which blocks all three Rho GTPases) completely inhibited the ability of ECs to form both vacuoles and lumens, whereas C3 transferase, a selective inhibitor of Rho, did not. Expression of either dominant-negative (N17) or constitutively active (V12) Cdc42 using recombinant adenoviruses dramatically inhibited EC vacuole and lumen formation in both collagen and fibrin matrices. Both vacuole and lumen formation initiated in ECs expressing dominant-negative(N17) Rac1 but later collapsed, indicating a role for Rac1 during later stages of vessel development. Analysis of cultures using confocal microscopy revealed green fluorescent protein-V12Rac1, -Rac1 wild-type and -Cdc42 wild-type chimeric proteins targeted to intracellular vacuole membranes during the lumen formation process. Also, expression of the verprolin-cofilin-acidic domain of N-WASP, a downstream Cdc42 effector, in ECs completely interfered with vacuole and lumen formation. These results collectively reveal a novel role for Cdc42 and Rac1 in the process of EC vacuole and lumen formation in three-dimensional extracellular matrices.