In Drosophila, the correct formation of the segmental commissures depends on neuron-glial interactions at the midline. The VUM midline neurons extend axons along which glial cells migrate in between anterior and posterior commissures. Here, we show that the gene kette is required for the normal projection of the VUM axons and subsequently disrupts glial migration. Axonal projection defects are also found for many other moto- and interneurons. In addition, kette affects the cell morphology of mesodermal and epidermal derivatives, which show an abnormal actin cytoskeleton. The KETTE protein is homologous to the transmembrane protein HEM-2/NAP1 evolutionary conserved from worms to vertebrates. In vitro analysis has shown a specific interaction of the vertebrate HEM-2/NAP1 with the SH2-SH3 adapter protein NCK and the small GTPase RAC1, which both have been implicated in regulating cytoskeleton organization and axonal growth. Hypomorphic kette mutations lead to axonal defects similar to mutations in the Drosophila NCK homolog dreadlocks. Furthermore, we show that kette and dock mutants genetically interact. NCK is thought to interact with the small G proteins RAC1 and CDC42, which play a role in axonal growth. In line with these observations, a kette phenocopy can be obtained following directed expression of mutant DCDC42 or DRAC1 in the CNS midline. In addition, the kette mutant phenotype can be partially rescued by expression of an activated DRAC1 transgene. Our data suggest an important role of the HEM-2 protein in cytoskeletal organization during axonal pathfinding.