The small GTPases Rac and Rho act as cellular switches in many important biological processes. In the fruit fly Drosophila, RhoA participates in the establishment of planar polarity, a process mediated by the receptor Frizzled (Fz). Thus far, analysis of Rac in this process has not been possible because of the absence of mutant Rac alleles. Here, we have investigated the role of Rac and Rho in establishing the polarity of ommatidia in the Drosophila eye.By expressing a dominant negative or a constitutively activated form of Rac1, we interfered specifically with Rac signaling and disrupted ommatidial polarity. The resulting defects were similar to the loss/gain-of-function phenotypes typical of tissue-polarity genes. Through genetic interaction and rescue experiments involving a polarity-specific, loss-of-function dishevelled (dsh) allele, we found that Rac1 acts downstream of Dsh in the Fz signaling pathway, but upstream of, or in parallel to, RhoA. Rac signaled to the nucleus through the Jun N-terminal kinase (JNK) cascade in this process. By generating point mutations in the effector loop of RhoA, we found that RhoA also signals to the nucleus during the establishment of ommatidial polarity. Nevertheless, Rac and RhoA activated transcription of distinct target genes.Rac is specifically required downstream of Dsh in the Fz pathway. It functions upstream or in parallel to RhoA and both signal to the nucleus, through distinct effectors, to establish planar polarity in the Drosophila eye.