Cdc42 is a member of the Rho GTPase family that has been implicated in several cell functions including proliferation and migration, but its physiologic role needs to be dissected in each cell type. We achieved B-cell and hematopoietic stem cell deletion of Cdc42 by conditional gene targeting in mice. Deletion of Cdc42 from proB/preB-cell stage significantly blocked B-cell development at T1 and later stages, resulting in reduced mature B-cell populations and reduced antigen-specific immunoglobulin M (IgM), IgG1, and IgG3 production. The Cdc42(-/-) B cells, themselves, were abnormal with impaired proliferation and survival. The mutant B cells were further characterized by a B-cell receptor (BCR) signaling defect with increased Erk and decreased Akt activation, as well as a defect in BCR-mediated B-cell-activating factor (BAFF) receptor up-regulation and subsequent BAFF receptor signaling in mature resting B cells. Surprisingly, Cdc42 was dispensable for stromal cell-derived factor-1alpha (SDF-1alpha)- or B-lymphocyte chemoattractant (BLC)-induced B-cell migration. Finally, loss of Cdc42 from hematopoietic stem cells did not alter common lymphoid progenitor production but severely reduced proB/preB- and immature B-cell populations, indicating that Cdc42 is also involved in B-cell precursor differentiation. These results reveal multifaceted roles of Cdc42 in B-cell development and activation.