TGFbeta-induced epithelio-mesenchymal transdifferentiation (EMT) has been shown to play a pivotal role in developmental processes such as palatogenesis and heart organogenesis. Interestingly, EMT has also been shown to contribute to the promotion of invasiveness during the later stages of tumorigenesis. Here we show that cells induced to undergo EMT by TGFbeta3 demonstrate increased motility on fibronectin and display a rapid activation of RhoA followed by a gradual downregulation of Cdc42 and Rac3 activity. The induced expression of a fast-cycling RhoA mutant (RhoA F30) stimulates the formation of stress fibers and spreading, and therefore the generation of mesenchymal phenotype. Inactivation of the Rho effector Rho-kinase, interferes with TGFbeta3-induced EMT by inhibiting stress fiber formation, whereas disruption of adherens and tight junctions was not significantly affected. Moreover, we show that TGFbeta3-induced RhoA/Rho-kinase activation is biologically significant, since palatal shelves from pre-fusion mouse embryos cultured in the presence of Rho-kinase inhibitors failed to fuse and midline epithelial cells did not undergo EMT. To conclude, our results indicate that TGFbeta3 induces rapid activation of the RhoA/Rho-kinase pathway and subsequently reorganization of the actin cytoskeleton. These changes are likely to be necessary in biological processes in which EMT has been shown to play a critical role, such as palatal fusion.