Tiam1 encodes an exchange factor for the Rho-like guanosine triphosphatase Rac. Both Tiam1 and activated RacV12 promote invasiveness of T lymphoma cells. In epithelial Madin-Darby canine kidney (MDCK) cells, Tiam1 localized to adherens junctions. Ectopic expression of Tiam1 or RacV12 inhibited hepatocyte growth factor-induced scattering by increasing E-cadherin-mediated cell-cell adhesion accompanied by actin polymerization at cell-cell contacts. In Ras-transformed MDCK cells, expression of Tiam1 or RacV12 restored E-cadherin-mediated adhesion, resulting in phenotypic reversion and loss of invasiveness. These data suggest an invasion-suppressor role for Tiam1 and Rac in epithelial cells.