RhoA is involved in multiple cellular processes, including cytoskeletal organization, gene expression, and transformation. These processes are mediated by a variety of downstream effector proteins. However, which effectors are involved in cellular transformation and how these proteins are activated following interaction with Rho remains to be established. A unique feature that distinguishes the Rho family from other Ras-related GTPases is the insert region, which may confer Rho-specific signaling events. Here we report that deletion of the insert region does not result in impaired effector binding. Instead, this insert deletion mutant (RhoRas, in which the insert helix has been replaced with loop 8 of Ras) acted in a dominant inhibitory fashion to block RhoA-induced transformation. Since RhoRas failed to promote stress fiber formation, we examined the ability of this mutant to bind to and subsequently activate Rho kinase. Surprisingly, RhoRas-GTP coprecipitated with Rho kinase but failed to activate it in vivo. These data suggested that the insert domain is not required for Rho kinase binding but plays a role in its activation. The constitutively active catalytic domain of Rho kinase did not promote focus formation alone or in the presence of Raf(340D) but cooperated with RhoRas to induce cellular transformation. This suggests that Rho kinase needs to cooperate with additional Rho effectors to promote transformation. Further, the Rho kinase catalytic domain reversed the inhibitory effect of RhoRas on Rho-induced transformation, suggesting that one of the downstream targets of Rho-induced transformation abrogated by RhoRas is indeed Rho kinase. In conclusion, we have demonstrated that the insert region of RhoA is required for Rho kinase activation but not for binding and that this kinase activity is required to induce morphologic transformation of NIH 3T3 cells.