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Classic cadherins function as adhesion-activated cell signaling receptors. On adhesive ligation, cadherins induce signaling cascades leading to actin cytoskeletal reorganization that is imperative for cadherin function. In particular, cadherin ligation activates actin assembly by the actin-related protein (Arp)2/3 complex, a process that critically affects the ability of cells to form and extend cadherin-based contacts. However, the signaling pathway(s) that activate Arp2/3 downstream of cadherin adhesion remain poorly understood. In this report we focused on the Rho family GTPases Rae and Cdc42, which can signal to Arp2/3. We found that homophilic engagement of E-cadherin simultaneously activates both Rac1 and Cdc42. However, by comparing the impact of dominant-negative Rac1 and Cdc42 mutants, we show that Rac1 is the dominant regulator of cadherin-directed actin assembly and homophilic contact formation. To pursue upstream elements of the Rac1 signaling path- way, we focused on the potential contribution of Tiam1 to cadherin-activated Rae signaling. We found that Tiam1 or the closely-related Tiam2/STEF1 was recruited to cell-cell contacts in an E-cadherin-dependent fashion. Moreover, a dominant-negative Tiam1 mutant perturbed cell spreading on cadherin-coated substrata. However, disruption of Tiam1 activity with dominant-negative mutants or RNA interference did not affect the ability of E-cadherin ligation to activate Rac1. We conclude that Rac1 critically influences cadherin-directed actin assembly as part of a signaling pathway independent of Tiam1. [ABSTRACT FROM AUTHOR]