Rac1, an important Rho GTPase that regulates the actin cytoskeleton, has long been suggested to participate in acetylcholine receptor (AChR) clustering at the postsynaptic neuromuscular junction. However, how Rac1 is regulated and how it influences AChR clusters have remained unexplored. This study shows that breaking the balance of Rac1 regulation, by either increasing or decreasing its activity, led to impaired formation and maintenance of AChR clusters. By manipulating Rac1 activity at different stages of AChR clustering in cultured myotubes, we show that Rac1 activation was required for the initial formation of AChR clusters, but its persistent activation led to AChR destabilization, and uncontrolled hyperactivation of Rac1 even caused excessive myotube fusion. Both AChR dispersal and myotube fusion induced by Rac1 were dependent on its downstream effector Pak1. Two Rac1 GAPs and six Rac1 GEFs were screened and found to be important for normal AChR clustering. This study reveals that, although general Rac1 activity remains at low levels during terminal differentiation of myotubes and AChR cluster maintenance, tightly regulated Rac1 activity controls normal AChR clustering.