Rac1 GTPase is hyperactivated in tumors and contributes to malignancy. Rac1 disruption of junctions requires its effector PAK1, but the precise mechanisms are unknown. Here, we show that E-cadherin is internalized via micropinocytosis in a PAK1–dependent manner without catenin dissociation and degradation. In addition to internalization, PAK1 regulates E-cadherin transport by fine-tuning Rab small GTPase function. PAK1 phosphorylates a core Rab regulator, RabGDIβ, but not RabGDIα. Phosphorylated RabGDIβ preferentially associates with Rab5 and Rab11, which is predicted to promote Rab retrieval from membranes. Consistent with this hypothesis, Rab11 is activated by Rac1, and inhibition of Rab11 function partially rescues E-cadherin destabilization. Thus, Rac1 activation reduces surface cadherin levels as a net result of higher bulk flow of membrane uptake that counteracts Rab11-dependent E-cadherin delivery to junctions (recycling and/or exocytosis). This unique small GTPase crosstalk has an impact on Rac1 and PAK1 regulation of membrane remodeling during epithelial dedifferentiation, adhesion, and motility.