It is well established that epidermal growth factor (EGF) induces the cytoskeleton reorganization and cell migration through two major signaling cascades: phospholipase C-γ1 (PLC-γ1) and Rho GTPases. However, little is known about the cross talk between PLC-γ1 and Rho GTPases. Here we showed that PLC-γ1 forms a complex with Rac1 in response to EGF. This interaction is direct and mediated by PLC-γ1 Src homology 3 (SH3) domain and Rac1 ¹⁰⁶PNTP¹⁰⁹ motif. This interaction is critical for EGF-induced Rac1 activation in vivo, and PLC-γ1 SH3 domain is actually a potent and specific Rac1 guanine nucleotide exchange factor in vitro. We have also demonstrated that the interaction between PLC-γ1 SH3 domain and Rac1 play a significant role in EGF-induced F-actin formation and cell migration. We conclude that PLC-γ1 and Rac1 coregulate EGF-induced cell cytoskeleton remodeling and cell migration by a direct functional interaction.