The Rho GTPase family member RhoE regulates actin filaments partly by binding to and inhibiting ROCK I, a serine/threonine kinase that induces actomyosin contractility. Here, we show that ROCK I can phosphorylate multiple residues on RhoE in vitro. In cells, ROCK I-phosphorylated RhoE localizes in the cytosol, whereas unphosphorylated RhoE is primarily associated with membranes. Phosphorylation has no effect on RhoE binding to ROCK I, but instead increases RhoE protein stability. Using phospho-specific antibodies, we show that ROCK phosphorylates endogenous RhoE at serine 11 upon cell stimulation with platelet-derived growth factor, and that this phosphorylation requires an active protein kinase C signalling pathway. In addition, we demonstrate that phosphorylation of RhoE correlates with its activity in inducing stress fibre disruption and inhibiting Ras-induced transformation. This is the first demonstration of an endogenous Rho family member being phosphorylated in vivo and indicates that phosphorylation is an important mechanism to control the stability and function of this GTPase-deficient Rho protein.