We have previously shown that actin ligands inhibit the fusion of yeast vacuoles in vitro, which suggests that actin remodeling is a subreaction of membrane fusion. Here, we demonstrate the presence of vacuole-associated actin polymerization activity, and its dependence on Cdc42p and Vrp1p. Using a sensitive in vitro pyrene-actin polymerization assay, we found that vacuole membranes stimulated polymerization, and this activity increased when vacuoles were preincubated under conditions that support membrane fusion. Vacuoles purified from a VRP1-gene deletion strain showed reduced polymerization activity, which could be recovered when reconstituted with excess Vrp1p. Cdc42p regulates this activity because overexpression of dominant-negative Cdc42p significantly reduced vacuole-associated polymerization activity, while dominant-active Cdc42p increased activity. We also used size-exclusion chromatography to directly examine changes in yeast actin induced by vacuole fusion. This assay confirmed that actin undergoes polymerization in a process requiring ATP. To further confirm the need for actin polymerization during vacuole fusion, an actin polymerization-deficient mutant strain was examined. This strain showed in vivo defects in vacuole fusion, and actin purified from this strain inhibited in vitro vacuole fusion. Affinity isolation of vacuole-associated actin and in vitro binding assays revealed a polymerization-dependent interaction between actin and the SNARE Ykt6p. Our results suggest that actin polymerization is a subreaction of vacuole membrane fusion governed by Cdc42p signal transduction.