Cdc42 and Rac1 are members of the rho family of small guanosinetriphosphatases and are required for a diverse set of cytoskeleton-membrane interactions in different cell types. Here we show that these two proteins contribute differently to the organization of epithelial cells in the Drosophila wing imaginal disc. Drac1 is required to assemble actin at adherens junctions. Failure of adherens junction actin assembly in Drac1 dominant-negative mutants is associated with increased cell death. Dcdc42, on the other hand, is required for processes that involve polarized cell shape changes during both pupal and larval development. In the third larval instar, Dcdc42 is required for apico-basal epithelial elongation. Whereas normal wing disc epithelial cells increase in height more than twofold during the third instar, cells that express a dominant-negative version of Dcdc42 remain short and are abnormally shaped. Dcdc42 localizes to both apical and basal regions of the cell during these events, and mediates elongation, at least in part, by effecting a reorganization of the basal actin cytoskeleton. These observations suggest that a common cdc42-based mechanism may govern polarized cell shape changes in a wide variety of cell types.