The small GTP-binding protein Cdc42 is thought to induce filopodium formation by regulating actin polymerization at the cell cortex. Although several Cdc42-binding proteins have been identified and some of them have been implicated in filopodium formation, the precise role of Cdc42 in modulating actin polymerization has not been defined. To understand the biochemical pathways that link Cdc42 to the actin cytoskeleton, we have reconstituted Cdc42-induced actin polymerization in Xenopus egg extracts. Using this cell-free system, we have developed a rapid and specific assay that has allowed us to fractionate the extract and isolate factors involved in this activity. We report here that at least two biochemically distinct components are required, based on their chromatographic behavior and affinity for Cdc42. One component is purified to homogeneity and is identified as the Arp2/3 complex, a protein complex that has been shown to nucleate actin polymerization. However, the purified complex alone is not sufficient to mediate the activity; a second component that binds Cdc42 directly and mediates the interaction between Cdc42 and the complex also is required. These results establish an important link between a signaling molecule, Cdc42, and a complex that can directly modulate actin networks in vitro. We propose that activation of the Arp2/3 complex by Cdc42 and other signaling molecules plays a central role in stimulating actin polymerization at the cell surface.