The small GTP-binding proteins Rac1 and Rac2 are critically important in regulating multiple signal transduction pathways in eukaryotic cells. Here we report the isolation of a novel third Rac family member, Rac3. Rac3 differs from Rac1/2 at its carboxyl-terminal end, a domain associated with subcellular localization and binding to specific cellular regulators. RAC3 mRNA expression patterns differ from those of RAC2, which is hematopoietic specific and also from those of RAC1. The RAC3 gene was mapped to chromosome 17q23-25, a region frequently deleted in breast cancer. Rac3 protein levels are not affected by organization of the actin cytoskeleton but remarkably, are serum-inducible. Rac3 is an active GTPase, and this activity is regulated by Bcr. When constitutively activated, Rac3 is able to stimulate efficiently the c-Jun amino-terminal kinase signaling pathway. These findings support a role for Rac3 in intracellular signaling.