PINOCYTOSIS and membrane ruffling are among the earliest and most dramatic cellular responses to stimulation by growth factors or other mitogens¹. The small Ras-related G proteins Rho and Rac have a regulatory role in membrane ruffling^1–3 and activated Rho has been shown to stimulate pinocytosis when microinjected into Xenopus oocytes⁴. In contrast to these well established effects of Rho and Rac on plasma membrane morphology and bulk pinocytosis, there has been no evidence for their involvement in the regulation of receptor-mediated endocytosis in clathrin-coated pits. Here we show that activated Rho and Rac inhibit transferrin-receptor-mediated endocytosis when expressed in intact cells. Furthermore, we have reconstituted these effects in a cell-free system and established that Rho and Rac can regulate clathrin-coated vesicle formation.