We have previously demonstrated that both isoprenylcysteine carboxylmethyltransferase (ICMT) and one of its substrates, the RhoGTPase Rac1, are critical for the tumor necrosis factor ␣ (TNF␣) stimulation of vascular cell adhesion molecule-1 expression in endothelial cells (EC). Here, we have shown that ICMT regulates TNF␣ stimulation of Rac1 activity. TNF␣ stimulation of EC increased the membrane association of Rac1, an event that is essential for Rac1 activity. ICMT inhibitor Nacetyl-S-farnesyl-L-cysteine (AFC) blocked the accumulation of Rac1 into the membrane both in resting and TNF␣-stimulated conditions. Similarly, the membraneassociated Rac1 was lower in Icmt-deficient versus wildtype mouse embryonic fibroblasts (MEFs). TNF␣ also increased the level of GTP-Rac1, the active form of Rac1, in EC. AFC completely suppressed the TNF␣ stimulation of increase in GTP-Rac1 levels. Confocal microscopy revealed resting EC Rac1 was present in the plasma membrane and also in the perinuclear region. AFC mislocalized Rac1, both from the plasma membrane and the perinuclear region. Mislocalization of Rac1 was also observed in Icmt-deficient versus wild-type MEFs. To determine the consequences of ICMT inhibition, we investigated the effect of AFC on p38 mitogen-activated protein (MAP) kinase phosphorylation, which is downstream of Rac1. AFC inhibited the TNF␣ stimulation of p38 MAP kinase phosphorylation in EC. TNF␣ stimulation of p38 MAP kinase phosphorylation was also significantly attenuated in Icmt-deficient versus wild-type MEFs. To understand the mechanism of inhibition of Rac1 activity, we examined the effect of ICMT inhibition on the interaction of Rac1 with its inhibitor, Rho guanine nucleotide dissociation inhibitor (RhoGDI). The association of Rac1 with its inhibitor RhoGDI was dramatically increased in the Icmt-deficient versus wild-type MEFs both in resting as well as in TNF␣-stimulated conditions, suggesting that RhoGDI was involved in inhibiting Rac1 activity under the conditions of ICMT inhibition. These results suggest that ICMT regulates Rac1 activity by controlling the interaction of Rac1 with RhoGDI. We hypothesize that ICMT regulates the release of Rac1 from RhoGDI.Some signaling proteins, such as small GTPases and the ␥ subunits of heterotrimeric G proteins, end with a CAAX (C for cysteine, A for aliphatic amino acids, and X for almost any other amino acid) sequence, which is post-translationally modified in three ways (1). Isoprenylation (farnesylation or geranylgeranylation) at cysteine is followed by cleavage of the last three amino acids (AAX) (1-3). Finally, the isoprenylated cysteine is carboxyl methylated by an endoplasmic reticulum resident enzyme (4, 5) isoprenylcysteine carboxylmethyltransferase (ICMT) 1 (5). This carboxyl methylation provides additional hydrophobicity to the isoprenylated proteins. Carboxyl methylation is dependent on the first two modifications and is potentially reversible.We demonstrated that ICMT and one of its substrates, the RhoGTPase Rac1, regulate in endothelial cells...