Rac1, a Rho family GTPase, is a mediator of diverse cellular functions including membrane ruffling, cell cycle progression, and transformation. Rac3, a close relative of Rac1, is less well characterized. Posttranslational addition of geranylgeranyl isoprenoid lipids to Rac proteins is required for biological activity. Inhibitors of geranylgeranyl transferase I (GGTIs) are currently under investigation as a possible anticancer therapy, although the targets of GGTIs have not been determined. We created COOH-terminal mutants of Rac1 and Rac3 that are farnesylated and used them to characterize Rac1 and Rac3 as physiological targets of GGTIs. We show that, like Rac1, activated Rac3 causes transformation and leads to membrane ruffling. Farnesylated versions of Rac1 and Rac3 retain the ability to signal to the transcription factor c-Jun and cause membrane ruffling and transformation, indicating that switching isoprenoid modification does not alter function. Finally, treatment with GGTIs led to the inhibition of membrane-ruffling and transforming activities of both activated and wild-type Rac1 and Rac3. However, the farnesylated versions of both activated and wild-type Rac1 and Rac3 were resistant to the inhibitory effects of GGTIs. These results illustrate that Rac1 and Rac3 are potential physiological targets for these novel drugs.