Although small GTP-binding proteins of the Rho family have been implicated in signaling to the actin cytoskeleton, the exact nature of the linkage has remained obscure. We describe a novel mechanism that links one Rho family member, Cdc42, to actin polymerization. N-WASP, a ubiquitously expressed Cdc42-interacting protein, is required for Cdc42-stimulated actin polymerization in Xenopus egg extracts. The C terminus of N-WASP binds to the Arp2/3 complex and dramatically stimulates its ability to nucleate actin polymerization. Although full-length N-WASP is less effective, its activity can be greatly enhanced by Cdc42 and phosphatidylinositol (4,5) bisphosphate. Therefore, N-WASP and the Arp2/3 complex comprise a core mechanism that directly connects signal transduction pathways to the stimulation of actin polymerization.