The Rho family small GTPase Cdc42 is critical for diverse cellular functions including the regulation of actin organization, cell polarity, intracellular membrane trafficking, transcription, cell cycle progression and cell transformation. Like other members of the Rho family, Cdc42 cycles between the GTP-bound, active state, and the inactive, GDP-bound state under tight regulation, and it is believed that the GTP bound form of Cdc42 represents the active signaling module in eliciting effector activation and cellular responses. The constitutively active mutant, V12, derived from the analogous mutations found in oncogenic Ras that are GTPase-defective, and a "fast-cycling" self-activating mutant, F28, of Cdc42, have been widely in use to study the cellular effects of Cdc42. Here we report that the constitutively active V12 mutant of Cdc42, when stably expressed in cells, could behave in a dominant negative fashion in inhibiting cell proliferation while the F28 mutant was growth stimulatory. The V12 mutant failed to transform NIH3T3 cells while F28 potently stimulated anchorage-independent growth. The growth inhibitory effect of the V12 mutant correlated with activation of JNK2 and suppression of the cyclin D1 and NF-kappaB expressions that were instead upregulated by the F28 mutant. Furthermore, the V12 mutant could suppress, whereas the F28 mutant potentiated or had no effect on, a wide variety of oncogene-induced cell transformation, including that by the Dbl family GEFs Dbl, Vav and Lbc and the oncogenic Ras, ErbB-2, PDGF B or Raf. These results raise the possibility that over-saturation or constitutive activation of Cdc42 signal may negatively impact on cell proliferation and that both the activation and deactivation steps, or the complete GTPase cycle, of Cdc42 is required for proper function.