The small GTPase Rho is believed to regulate the actin cytoskeleton and cell adhesion through its specific targets. We previously identified the Rho targets: protein kinase N, Rho-associated kinase (Rho-kinase), and the myosin-binding subunit (MBS) of myosin phosphatase. We found that in MDCK epithelial cells, MBS accumulated at the tetradecanoylphorbol-13-acetate (TPA)-induced membrane ruffling area, where moesin, a member of the ERM (ezrin, radixin, and moesin) family, was localized. Neither membrane ruffling nor an accumulation of moesin and MBS at the free-end plasma membrane was induced when MDCK cells were stimulated with TPA after the microinjection of C3, which ADP-ribosylates and inactivates Rho. MBS was colocalized with moesin at the cell-cell contact sites in MDCK cells. We also found that moesin was coimmunoprecipitated with MBS from MDCK cells. Recombinant MBS interacted with the amino-terminal domains of moesin and ezrin. Myosin phosphatase composed of the catalytic subunit and MBS showed phosphatase activity toward moesin, which was phosphorylated by Rho-kinase. The phosphatase activity was inhibited when MBS was phosphorylated by Rho-kinase. These results suggest that MBS is recruited with moesin to the plasma membrane and that myosin phosphatase and Rho-kinase regulate the phosphorylation state of moesin downstream of Rho.