The PKN family of PKC-related protein kinases constitutes the major Rho GTPase-associated protein kinase activities detected in mammalian tissues. However, the biological functions of these kinases are unknown. We have identified a closely related PKN homolog in Drosophila (Pkn) that binds specifically to GTP-activated Rho1 and Rac1 GTPases through distinct binding sites on Pkn. The interaction of Pkn with either of these GTPases results in increased kinase activity, suggesting that Pkn is a shared Rho/Rac effector target. Characterization of a loss-of-function mutant of Drosophila Pkn revealed that this kinase is required specifically for the epidermal cell shape changes during the morphogenetic process of dorsal closure of the developing embryo. Moreover, Pkn, as well as the Rho1 GTPase, mediate a pathway for cell shape changes in dorsal closure that is independent of the previously reported Rac GTPase-mediated Jun amino (N)-terminal kinase (JNK) cascade that regulates gene expression required for dorsal closure. Thus, it appears that distinct but coordinated Rho- and Rac-mediated signaling pathways regulate the cell shape changes required for dorsal closure and that Pkn provides a GTPase effector function for cell shape changes in vivo, which acts together with a Rac-JNK transcriptional pathway in the morphogenesis of the Drosophila embryo.