The kidney is primarily comprised of highly polarized epithelial cells. Much has been learned recently about the mechanisms of epithelial polarization. However, in most experimental systems the orientation of this polarity is determined by external cues, such as growth of epithelial cells on a filter support. When Madin-Darby canine kidney (MDCK) cells are grown instead in a three-dimensional (3D) collagen gel, the cells form hollow cysts lined by a monolayer of epithelial cells, with their apical surfaces all facing the central lumen. We have found that expression of a dominant-negative (DN) form of the small GTPase Rac1 causes an inversion of epithelial polarity, such that the apical surface of the cells instead faces the periphery of the cyst. This indicates that the establishment of polarity and the orientation of polarity can be experimentally separated by growing cells in a 3D collagen gel, where there is no filter support to provide an external cue for orientation. DN Rac1 causes a defect in the assembly of laminin into its normal basement membrane network, and addition of a high concentration of exogenous laminin rescues the inversion of polarity caused by DN Rac1.