E-cadherin cell-cell adhesion plays a major role in the maintenance of the morphology and function of epithelial tissues. Modulation of E-cadherin function is an important process in morphogenesis and tumour de-differentiation. We have previously shown that constitutively active Rac1 induces the disassembly of E-cadherin complexes from junctions in human keratinocytes. Here, we compare this activity in three members of the Rac subfamily (Rac1, Rac3 and Rac1b) and investigate the molecular mechanisms underlying Rac1-induced destabilization of junctions. We demonstrate that Rac3 shares with Rac1 the ability to interfere with cadherin-mediated adhesion. Rac1b is an alternative splice variant of Rac1 but, surprisingly, Rac1b cannot induce junction disassembly. Thus, Rac family members differ on their potential to perturb keratinocyte cell-cell contacts. The mechanism through which Rac promotes disassembly of cadherin-dependent adhesion does not involve an increase in contractility. Instead, activation of the Rac target PAK1 is necessary for destabilization of cell-cell contacts. Inhibition of PAK1 by dominant-negative constructs or depletion of endogenous PAK1 by RNA interference efficiently blocked Rac1-induced perturbation of junctions. Interestingly, PAK1 cannot be activated by Rac1b, suggesting that this may contribute to the inability of Rac1b to disrupt cell-cell contacts in keratinocytes. As PAK1 also plays a crucial role in lamellipodia formation, our data indicate that PAK1 is at the interface between junction destabilization and increased motility during morphogenetic events.