Oncogenic Ras mutants such as v-Ha-Ras cause a rapid rearrangement of actin cytoskeleton during malignant transformation of fibroblasts or epithelial cells. Both PI-3 kinase and Rac are required for Ras-induced malignant transformation and membrane ruffling. However, the signal transduction pathway(s) downstream of Rac that leads to membrane ruffling and other cytoskeletal change(s) as well as the exact biochemical nature of the cytoskeletal change remain unknown. Cortactin/EMS1 is the first identified molecule that is dissociated in a Rac-phosphatidylinositol 4,5-biphosphate (PIP2)-dependent manner from the actin-myosin II complex during Ras-induced malignant transformation; either the PIP2 binder HS1 or the Rac blocker SCH51344 restores the ability of EMS1 to bind the complex and suppresses the oncogenicity of Ras. Furthermore, while PIP2 inhibits the actin-EMS1 interaction, HS1 reverses the PIP2 effect. Thus, we propose that PIP2, an end-product of the oncogenic Ras/PI-3 kinase/Rac pathway, serves as a second messenger in the Ras/Rac-induced disruption of the actin cytoskeleton and discuss the anticancer drug potential of PIP2-binding molecules.