The pathways by which mammalian Ras proteins induce cortical actin rearrangement and cause cellular transformation are investigated using partial loss of function mutants of Ras and activated and inhibitory forms of various postulated target enzymes for Ras. Efficient transformation by Ras requires activation of other direct effectors in addition to the MAP kinase kinase kinase Raf and is inhibited by inactivation of the PI 3-kinase pathway. Actin rearrangement correlates with the ability of Ras mutants to activate PI 3-kinase. Inhibition of PI 3-kinase activity blocks Ras induction of membrane ruffling, while activated PI 3-kinase is sufficient to induce membrane ruffling, acting through Rac. The ability of activated Ras to stimulate PI 3-kinase in addition to Raf is therefore important in Ras transformation of mammalian cells and essential in Ras-induced cytoskeletal reorganization.