Previous studies using dominant-mutant constructs have implicated Rac1 GTPase in neuritogenesis and neuronal migration. However, overexpression of dominant mutants generally blocks Rho-GTPase activity; thus, it may not reveal the specific or physiological functions of Rac1. To address this issue, we have applied a conditional gene-targeting strategy, using Foxg1-Cre mice to delete Rac1 in the ventricular zone (VZ) of telencephalon and Dlx5/6-Cre-IRES (internal ribosomal entry site)-EGFP (enhanced green fluorescent protein) (Dlx5/6-CIE) in the subventricular zone (SVZ) of ventral telencephalon, respectively. Surprisingly, the deletion of Rac1 in VZ progenitors did not prevent axonal outgrowth of telencephalic neurons. However, the anterior commissure was absent, and the corpus callosal as well as hippocampal commissural axons failed to cross the midline in Rac1/Foxg1-Cre knock-out embryos. The thalamocortical and corticothalamic axons also showed defasciculation or projection defects. These results suggest that Rac1 controls axon guidance rather than neuritogenesis. In addition, although Rac1/Foxg1-Cre knock-out embryos showed delayed radial migration of cortical projection neurons and severe impairment of tangential migration by the ventral telencephalon-derived interneurons, deletion of Rac1 in the SVZ by Dlx5/6-CIE mice produced no discernible defects in tangential migration. These contrasting effects of Rac1 deletion on tangential migration suggest that Rac1 is dispensable for cellular motility per se during neuronal migration. Together, these results underscore the challenge of deciphering the biological functions of Rac1, and Rho-GTPases in general, during mammalian brain development. Moreover, they indicate that Rac1 has a critical role in axon guidance and in acquisition of migratory competency during differentiation of the progenitors for the ventral telencephalon-derived interneurons.