Oncogenic transformation of cells alters their morphology, cytoskeletal organization, and adhesive interactions. When the mammary epithelial cell line MCF10A is transformed by activated H-Ras, the cells display a mesenchymal/fibroblastic morphology with decreased cell-cell junctions but increased focal adhesions and stress fibers. We have investigated whether the transformed phenotype is due to Rho activation. The Ras-transformed MCF10A cells have elevated levels of myosin light chain phosphorylation and are more contractile than their normal counterparts, consistent with the activation of Rho. Furthermore, inhibitors of contractility restore a more normal epithelial phenotype to the Ras-transformed MCF10A cells. However, inhibiting Rho by microinjection of C3 exotransferase or dominant negative RhoA only partially restores the normal phenotype, in that it fails to restore normal junctional organization. This result prompted us to examine the effect that inhibiting Rho would have on the junctions of normal MCF10A cells. We have found that inhibiting Rho by C3 microinjection leads to a disruption of E- cadherin cytoskeletal links in adherens junctions and blocks the assembly of new adherens junctions. The introduction of constitutively active Rho into normal MCF10A cells did not mimic the Ras-transformed phenotype. Thus, these results lead us to conclude that some, but not all, characteristics of Ras- transformed epithelial cells are due to activated Rho. Whereas Rho is needed for the assembly of adherens junctions, high levels of activated Rho in Ras- transformed cells contribute to their altered cytoskeletal organization. However, additional events triggered by Ras must also be required for the disruption of adherens junctions and the full development of the transformed epithelial phenotype.