Neurite outgrowth is an important process in the formation of neuronal networks. Rac1 and Cdc42, members of the Rho-family GTPases, positively regulate neurite extension through reorganization of the actin cytoskeleton. Here, we examine the dynamic linkage between Rac1/Cdc42 and phosphatidylinositol 3-kinase (PI3-kinase) during nerve growth factor (NGF)-induced neurite outgrowth in PC12 cells. Activity imaging using fluorescence resonance energy transfer probes showed that PI3-kinase as well as Rac1/Cdc42 was transiently activated in broad areas of the cell periphery immediately after NGF addition. Subsequently, local and repetitive activation of PI3-kinase and Rac1/Cdc42 was observed at the protruding sites. Depletion of Vav2 and Vav3 by RNA interference significantly inhibited both Rac1/Cdc42 activation and the formation of short processes leading to neurite outgrowth. At the NGF-induced protrusions, local phosphatidylinositol 3,4,5-trisphosphate accumulation recruited Vav2 and Vav3 to activate Rac1 and Cdc42, and conversely, Vav2 and Vav3 were required for the local activation of PI3-kinase. These observations demonstrated for the first time that Vav2 and Vav3 are essential constituents of the positive feedback loop that is comprised of PI3-kinase and Rac1/Cdc42 and cycles locally with morphological changes.