Rac1 is a member of the Rho family of small GTPases that not only regulates signaling pathways involved in cell adhesion and migration but also regulates gene transcription. Here we show that the transcriptional repressor BCL-6 is regulated by Rac1 signaling. Transfection of active Rac1 mutants into colorectal DLD-1 cells led to increased expression of a BCL-6-controlled luciferase reporter construct. Conversely, inhibition of endogenous Rac1 activation by the Rac1 inhibitor NSC23766 decreased reporter activity. Moreover, BCL-6 lost its typical localization to nuclear dots upon activation of Rac1 and became predominantly soluble in a non-chromatin-bound cell fraction. Rac1 signaling also regulated the expression of endogenous BCL-6-regulated genes, including the p50 precursor NF-kappaB1/p105 and the cell adhesion molecule CD44. Interestingly, these effects were not stimulated by the alternative splice variant Rac1b. The mechanism of BCL-6 inhibition does not involve formation of a stable Rac1/BCL-6 complex and is independent of Rac-induced reactive oxygen species production or Jun NH(2)-terminal kinase activation. We show that PAK1 mediates inhibition downstream of Rac and can directly phosphorylate BCL-6. Together, these data provide substantial evidence that Rac1 signaling inhibits the transcriptional repressor BCL-6 in colorectal cells and reveal a novel pathway that links Rac1 signaling to the regulation of gene transcription.