Cdc42p is an essential GTPase that belongs to the Rho/Rac subfamily of Ras-like GTPases. These proteins act as molecular switches by responding to exogenous and/or endogenous signals and relaying those signals to activate downstream components of a biological pathway. The 11 current members of the Cdc42p family display between 75 and 100% amino acid identity and are functional as well as structural homologs. Cdc42p transduces signals to the actin cytoskeleton to initiate and maintain polarized gorwth and to mitogen-activated protein morphogenesis. In the budding yeast Saccharomyces cerevisiae, Cdc42p plays an important role in multiple actin-dependent morphogenetic events such as bud emergence, mating-projection formation, and pseudohyphal growth. In mammalian cells, Cdc42p regulates a variety of actin-dependent events and induces the JNK/SAPK protein kinase cascade, which leads to the activation of transcription factors within the nucleus. Cdc42p mediates these processes through interactions with a myriad of downstream effectors, whose number and regulation we are just starting to understand. In addition, Cdc42p has been implicated in a number of human diseases through interactions with its regulators and downstream effectors. While much is known about Cdc42p structure and functional interactions, little is known about the mechanism(s) by which it transduces signals within the cell. Future research should focus on this question as well as on the detailed analysis of the interactions of Cdc42p with its regulators and downstream effectors.