Cdc42 is a small GTP-binding protein which has been implicated in a number of cellular activities, including cell morphology, motility, cell-cycle progression, and malignant transformation. While GTPase-defective forms of Cdc42 inhibit cell growth, a mutation [Cdc42(F28L)] that allows the constitutive exchange of GDP for GTP and is GTPase-competent induces cellular transformation. These results suggest that Cdc42 must cycle between its GTP- and GDP-bound states to stimulate cell growth. In attempting to design Cdc42 molecules with more potent transforming activity, we set out to generate other types of Cdc42 mutants capable of constitutive GDP-GTP exchange. Here, we describe one such mutant, generated by changing a conserved aspartic acid residue at position 118 to an asparagine. The Cdc42(D118N) protein exchanges GDP for GTP more rapidly than wild-type Cdc42, but significantly more slowly than the Cdc42(F28L) mutant. Despite its slower rate of activation, the Cdc42(D118N) mutant is more potent at inducing cellular transformation than the Cdc42(F28L) protein, and causes a significant loss in actin stress fibers, reminiscent of what is observed with fibroblasts transformed by oncogenic Ras mutants. Effector-loop mutations made within the D118N background inhibit Cdc42-induced transformation and Cdc42-mediated antiapoptotic (survival) activity to similar extents. In addition, mutating aspartic acid 121 (to asparagine), which forms part of a caspase cleavage site (DLRD, residues 118-121 of Cdc42), in combination with the F28L mutation generates a Cdc42 molecule [Cdc42(F28L/D121N)] with transforming activity significantly stronger than that of Cdc42(F28L). Thus, mutations that combine some capacity for cycling between the GTP- and GDP-bound states with increased survival against apoptotic signals yield Cdc42 molecules with the maximum capability for inducing cellular transformation.