The expression of tissue-specific genes during mammary gland differentiation relies on the coincidence of two distinct signaling events: the continued engagement of beta1 integrins with the extracellular matrix (ECM) and a hormonal stimulus from prolactin (Prl). How the integrin and Prl receptor (PrlR) systems integrate to regulate milk protein gene synthesis is unknown. In this study, we identify Rac1 as a key link. Dominant-negative Rac1 prevents Prl-induced synthesis of the milk protein beta-casein in primary mammary epithelial cells cultured as three-dimensional acini on basement membrane. Conversely, activated Rac1 rescues the defective beta-casein synthesis that occurs under conditions not normally permissive for mammary differentiation, either in beta1 integrin-null cells or in wild-type cells cultured on collagen. Rac1 is required downstream of integrins for activation of the PrlR/Stat5 signaling cascade. Cdc42 is also necessary for milk protein synthesis but functions via a distinct mechanism to Rac1. This study identifies the integration of signals provided by ECM and hormones as a novel role for Rho family guanosine triphosphatases.