In a previous study (Shin, E. Y., Shin, K. S., Lee, C. S., Woo, K. N., Quan, S. H., Soung, N. K., Kim, Y. G., Cha, C. I., Kim, S. R., Park, D., Bokoch, G. M., and Kim, E. G. (2002) J. Biol. Chem. 277, 44417-44430) we reported that phosphorylation of p85 PIX, a guanine nucleotide exchange factor (GEF) for Rac1/Cdc42, is a signal for translocation of the PIX complex to neuronal growth cones and is associated with basic fibroblast growth factor (bFGF)-induced neurite outgrowth. However, the issue of whether p85 PIX phosphorylation affects GEF activity on Rac1/Cdc42 is yet to be explored. Here we show that Rac1 activation occurs in a p85 PIX phosphorylationdependent manner. A GST-PBD binding assay reveals that Rac1 is activated in a dose-and time-dependent manner in PC12 cells in response to bFGF. Inhibition of ERK or PAK2, the kinases upstream of p85 PIX in the bFGF signaling, prevents Rac1 activation, suggesting that phosphorylation of p85 PIX functions upstream of Rac1 activation. To directly address this issue, transfection studies with wild-type and mutant p85 PIX (S525A/ T526A, a non-phosphorylatable form) were performed. Expression of mutant PIX markedly inhibits both bFGFand nerve growth factor (NGF)-induced activation of Rac1, indicating that phosphorylation of p85 PIX is responsible for activation of this G protein. Both wildtype and mutant p85 PIX displaying negative GEF activity (L238R/L239S) are similarly recruited to growth cones, suggesting that Rac1 activation is not essential for translocation of the PIX complex (PAK2-p85 PIX-Rac1). However, expression of mutant p85 PIX (L238R/ L239S) results in retraction of the pre-existing neurites. Our results provide evidence that bFGF-and NGF-induced phosphorylation of p85 PIX mediates Rac1 activation, which in turn regulates cytoskeletal reorganization at growth cones, but not translocation of the PIX complex.