The invasion-inducing T-lymphoma invasion and metastasis 1 (Tiam1) protein functions as a guanine nucleotide exchange factor (GEF) for the small GTPase Rac1. Differentiation-dependent expression of Tiam1 in the developing brain suggests a role for this GEF and its effector Rac1 in the control of neuronal morphology. Here we show that overexpression of Tiam1 induces cell spreading and affects neurite outgrowth in N1E-115 neuroblastoma cells. These effects are Rac-dependent and strongly promoted by laminin. Overexpression of Tiam1 recruits the alpha 6 beta 1 integrin, a laminin receptor, to specific adhesive contacts at the cell periphery, which are different from focal contacts. Cells overexpressing Tiam1 no longer respond to lysophosphatidic acid- induced neurite retraction and cell rounding, processes mediated by Rho, suggesting that Tiam1-induced activation of Rac antagonizes Rho signaling. This inhibition can be overcome by coexpression of constitutively active RhoA, which may indicate that regulation occurs at the level of Rho or upstream. Conversely, neurite formation induced by Tiam1 or Rac1 is further promoted by inactivating Rho. These results demonstrate that Rac- and Rho-mediated pathways oppose each other during neurite formation and that a balance between these pathways determines neuronal morphology. Furthermore, our data underscore the potential role of Tiam1 as a specific regulator of Rac during neurite formation and illustrate the importance of reciprocal interactions between the cytoskeleton and the extracellular matrix during this process.