Ras-induced malignant transformation requires Ras farnesylation, a lipid posttranslational modification catalyzed by farnesyltransferase (FTase). Inhibitors of this enzyme have been shown to block Ras-dependent transformation, but the mechanism by which this occurs remains largely unknown. We have designed FTI-276, a peptide mimetic of the COOH-terminal Cys-Val-Ile-Met of K-Ras4B that inhibited potently FTase in vitro (IC50 = 500 pM) and was highly selective for FTase over geranylgeranyltransferase I (GGTase I) (IC50 = 50 nM). FTI-277, the methyl ester derivative of FTI-276, was extremely potent (IC50 = 100 nM) at inhibiting H-Ras, but not the geranylgeranylated Rap1A processing in whole cells. Treatment of H-Ras oncogene-transformed NIH 3T3 cells with FTI-277 blocked recruitment to the plasma membrane and subsequent activation of the serine/threonine kinase c-Raf-1 in cells transformed by farnesylated Ras (H-RasF), but not geranylgeranylated, Ras (H-RasGG). FTI-277 induced accumulation of cytoplasmic non-farnesylated H-Ras that was able to bind Raf and form cytoplasmic Ras/Raf complexes in which Raf kinase was not activated. Furthermore, FTI-277 blocked constitutive activation of mitogen-activated protein kinase (MAPK) in H-RasF, but not H-RasGG, or Raf-transformed cells. FTI-277 also inhibited oncogenic K-Ras4B processing and constitutive activation of MAPK, but the concentrations required were 100-fold higher than those needed for H-Ras inhibition. The results demonstrate that FTI-277 blocks Ras oncogenic signaling by accumulating inactive Ras/Raf complexes in the cytoplasm, hence preventing constitutive activation of the MAPK cascade.