The RAC/ROP family of small GTPases are central regulators of important cellular processes in plants. AtRAC2/ROP7 is an ancient member of the RAC/ROP gene family in Arabidopsis thaliana whose functions are generally unknown. In order to study the spatial expression pattern of the AtRAC2/ROP7 gene, transgenic plants expressing GUS or GFP under the control of the AtRAC2/ROP7 promoter were analysed. Functional analysis of AtRAC2/ROP7 was done using transgenic plants overexpressing wild-type and constitutively activated AtRAC2/ROP7 (Val15Gly), and an AtRAC2/ROP7T-DNA insertion mutant. The AtRAC2/ROP7 promoter directs a highly specific xylem-specific expression in the root, hypocotyl, stem, and leaves. The expression is developmentally limited to the late stages of xylem differentiation, and coincides with the formation of secondary cell walls. Leaf epidermal cells of transgenic plants overexpressing constitutively active AtRAC2/ROP7 exhibited highly impaired lobe formation, suggesting that AtRAC2/ROP7 is able to regulate polar cell expansion. Finally, GFP-AtRAC2/ROP7 fusion proteins were localized to the plasma membrane. The results indicate a role for AtRAC2/ROP7 in the development of secondary cell walls of xylem vessels.