Epithelial cell sheets line the organ and body surfaces and the specialized barrier functions of these epithelia regulate the exchange of substances with the outside environment and between different body compartments. Epithelia play a role in a wide range of physiological processes such as digestion, excretion, and leukocyte trafficking. In addition, during development, some epithelia form transient primitive structures, including the neural tube and somites, which are essential for the development of more complex organs. The establishment and maintenance of epithelial cell polarity is critical for the development and functioning of multicellular organisms (Nelson 2000). A multi-step model for the establishment of cell polarity has been proposed by Drubin and Nelson (1996). Cell polarity is initiated by a spatial cue, such as generated by cell–cell contact sites. This cue is interpreted and marked by the formation of signaling complexes that relay the spatial information to the actin cytoskeleton. Localized actin assembly then leads to the formation of a targeting patch, which functions to reinforce the initial cue. Subsequently, this cue can further be propagated via a reorganization of the microtubule cytoskeleton, which in turn causes a redistribution of the membrane trafficking apparatus. In addition to actin cytoskeletal dynamics and vesicle trafficking, epithelial morphogenesis also depends on cell–substrate and cell–cell adhesion. Members of the Rho family of GTPases play essential roles in each of these processes (for reviews, see Hall 1998; Kaibuchi et al. 1999a,b; Braga 2000; Ellis and Mellor 2000; Schwartz and Shattil 2000; Ridley 2001a,b) and therefore it is not surprising to see that Rho GTPases have emerged as critical players at multiple stages of epithelial morphogenesis. In this review we will discuss the involvement of Rho family members in the development and maintenance of epithelial morphology and highlight recent advances in our understanding of the roles of these GTPases in the establishment of epithelial polarity. We will also discuss the participation of these GTPases in epithelial remodeling during wound-healing and epithelial-mesenchymal transitions. As other members of the Ras superfamily, Rho GTPases cycle between a GDP-bound (inactive) state and a GTP-bound (active) state. In the active state, these GTPases relay signals from growth factors, cytokines, and adhesion molecules to regulate a wide range of biological processes, including actin cytoskeleton organization, transcriptional regulation, and vesicle trafficking (Van Aelst and D’Souza-Schorey 1997; Hall 1998). The nucleotide state of Rho family proteins is controlled by three classes of regulatory proteins: guanine nucleotide exchange factors (GEFs), GTPase activating proteins (GAPs), and guanine nucleotide dissociation inhibitors (GDIs) (Boguski and McCormick 1993). GEFs catalyze the exchange of GDP for GTP by facilitating the release of GDP and transient stabilization of the nucleotide-free protein. GAPs promote the intrinsic GTP hydrolyzing activity of Rho proteins, thereby enhancing their conversion to the GDP-bound form. GDIs preferentially bind to GDP-bound GTPases and prevent spontaneous and GEF-catalyzed release of nucleotide, thereby maintaining the GTPases in the inactive state. Although activation of Rho GTPases in response to extracellular signals in principle could occur either via the activation of GEFs or inhibition of GAPs and GDIs, studies on oncogenic forms of GEFs suggest that nucleotide exchange is the rate-limiting step in GTPase activation. The localized activation of GEFs is likely to be of critical importance in polarity establishment and morphogenesis. Localized control of GEFs and GTPases has been extensively characterized in the budding yeast Saccharomyces cerevisiae. Polarized growth is important at several stages of the budding yeast life cycle, including bud formation during vegetative growth and shmoo formation during mating. Recent genetic and biochemical analyses of the roles of the GTPase Cdc42 and its GEF Cdc24 in these processes has led to a model in which GEF activity is regulated in four distinct steps: GEF recruitment to the plasma membrane and subsequent activation, stabilization by adaptor proteins, and termination of signaling by GEF inactivation (Gulli and Peter 2001). Less is known about the regulation of GEFs in 3Corresponding author. E-MAIL vanaelst@cshl.org; FAX (516) 367-8815. Article and publication are at http://www.genesdev.org/cgi/doi/10.1101/ gad.978802.