RAS interacts with multiple targets in the cell and controls at least two signaling pathways, one regulating extracellular signal-regulated kinase (ERK) activation and the other controlling membrane ruffling formation. These two pathways appear to act synergistically to cause transformation. SCH 51344 is a pyrazolo-quinoline derivative identified based on its ability to derepress transformation sensitive alpha-actin promoter in RAS-transformed cells. Previous studies have shown that SCH 51344 is a potent inhibitor of RAS-transformation. However, SCH 51344 had very little effect on the activities of proteins in the ERK pathway, suggesting that it inhibits RAS-transformation by a novel mechanism. In this study, we show that SCH 51344 specifically blocks membrane ruffling induced by activated forms of H-RAS, K-RAS, N-RAS and RAC. Treatment of fibroblast cells with this compound had very little effect on RAS-mediated activation of ERK and JUN kinase activities. SCH 51344 was effective in inhibiting the anchorage-independent growth of Rat-2 fibroblast cells transformed by the three forms of oncogenic RAS and RAC V12. These results indicate that SCH 51344 inhibits a critical component of the membrane ruffling pathway downstream from RAC and suggest that targeting this pathway may be an effective approach to inhibit transformation by RAS and other oncogenes.