Rho family proteins are essential for the formation of adherens junctions, which are required for the maintenance of epithelial integrity. Activated Rac and the Rac exchange factor Tiam1 have been shown to promote the formation of adherens junctions and the accompanying induction of an epithelioid phenotype in a number of cell lines. Here we show that Madin-Darby canine kidney II cells in which Tiam1 was down-regulated using short interfering RNA disassembled their cadherin-based adhesions and acquired a flattened, migratory, and mesenchymal morphology. In addition, the expression of E1A in mesenchymal V12Ras-transformed Madin-Darby canine kidney II cells led simultaneously to the up-regulation of the Tiam1 protein, the activation of Rac, the formation of cadherin-based adhesions, and reversion to an epithelial phenotype. This finding suggests that E1A induces an epithelial morphology through the up-regulation of Tiam1 and, thereby, the activation of Rac and the formation of cadherin-based adhesions. Indeed, we found that E1A is able to induce an epithelial-like morphology accompanied by the formation of cadherin-based adhesions only in wild-type but not in Tiam1-deficient primary mouse embryonic fibroblasts. These studies indicate that the Rac activator Tiam1 is essential for the formation as well as the maintenance of cadherin-based adhesions.