Members of the receptor protein tyrosine phosphatase (RPTP) subfamily of cell adhesion molecules (CAMs) mediate neurite outgrowth and growth cone repulsion. PTPmu is a growth permissive substrate for nasal retinal ganglion cell (RGC) neurites and a growth inhibitory substrate for temporal RGCs. In this manuscript, we demonstrate that the distinct PTPmu-dependent phenotypes of nasal outgrowth and temporal repulsion are regulated by Rho GTPases. The role of Rho GTPases in the regulation of nasal outgrowth and temporal repulsion was tested by utilizing dominant negative and constitutively active forms of Rac1, RhoA and Cdc42 in Bonhoeffer stripe assays. Nasal neurite outgrowth on PTPmu was blocked by Cdc42-DN. Temporal repulsion to a PTPmu substrate was substantially reduced by addition of Cdc42-DN. The molecule that regulates the switch between permissive versus repulsive responses to PTPmu is Rac1 for temporal neurons. Inhibition of Rac1 is required for repulsion of temporal neurons. Interestingly, adding Rac1-CA to temporal RGC neurons converted PTPmu-dependent repulsion to a permissive response. In addition, adding exogenous Rac1-DN to nasal neurons induced a phenotype switch from a permissive to repulsive response to PTPmu. Together these data suggest that Cdc42 activity is required for both permissive and repulsive responses to PTPmu. However, the key to PTPmu-dependent repulsion is inhibition of Rac1 activity in temporal RGC neurons.