The rho proteins, p21rho, are ubiquitously expressed guanine nucleotide binding proteins with approximately 30% amino acid homology to p21ras, but their biochemical function is unknown. We show here that microinjection of constitutively activated recombinant rho protein (Val14rho) into subconfluent cells induces dramatic changes in cell morphology: 15-30 min after injection cells adopt a distinct and novel phenotype with a contracted cell body and finger-like processes still adherent to the substratum. Ribosylation of Val14rho with the ADP-ribosyltransferase C3 from clostridium botulinum, before microinjection, renders the protein biologically inactive, but it has no effect on either its intrinsic biochemical properties or on its interaction with the GTPase activating protein, rho GAP. Micro-injection of ribosylated normal rho, on the other hand, has a similar effect of injection of C3 transferase and induces complete rounding up of cells. We also report striking biochemical changes in actin filament organization when contact-inhibited quiescent 3T3 cells are injected with Val14rho protein. The effects induced by activation or inactivation of p21rho described here, suggest that the biological function of this protein is to control some aspect of cytoskeletal organization.