During neuromuscular junction formation, agrin secreted from motor neurons causes muscle cell surface acetylcholine receptors (AChRs) to cluster at synaptic sites by mechanisms that are insufficiently understood. The Rho family of small guanosine triphosphatases (GTPases), including Rac and Cdc42, can mediate focal reorganization of the cell periphery in response to extracellular signals. Here, we investigated the role of Rac and Cdc42 in coupling agrin signaling to AChR clustering. We found that agrin causes marked muscle-specific activation of Rac and Cdc42 in differentiated myotubes, as detected by biochemical measurements. Moreover, this activation is crucial for AChR clustering, since the expression of dominant interfering mutants of either Rac or Cdc42 in myotubes blocks agrin-induced AChR clustering. In contrast, constitutively active Rac and Cdc42 mutants cause AChR to aggregate in the absence of agrin. By indicating that agrin-dependent activation of Rac and Cdc42 constitutes a critical step in the signaling pathway leading to AChR clustering, these findings suggest a novel role for these Rho-GTPases: the coupling of neuronal signaling to a key step in neuromuscular synaptogenesis.