Cdc42 is a member of the Rho GTPase family known to regulate multiple signaling pathways and functions in eukaryotic cells. However, current knowledge of Cdc42 function came mostly from studies using mutant overexpression approaches in clonal cell lines and from genetic studies in lower eukaryotes; the physiologic role of Cdc42 in mammalian cells has not been assessed genetically. We have generated a Cdc42 conditional knockout mouse model in the present studies that allows the investigation of Cdc42 function in the animal cells with minimal perturbation of endogenous cellular environment. In Chapter 2, we have attempted to resolve some controversial issues related to Cdc42 function with the conditional floxed Cdc42 primary mouse embryonic fibroblasts (MEF) cells. Our characterizations of Cdc42-/- and Cdc42GAP-/- MEFs reaffirm the critical involvement of Cdc42 in filopodia induction, migration and proliferation in primary mouse embryonic fibroblasts and demonstrate a different requirement of Cdc42 activity in primary MEFs from ES or ES-derived clonal fibroblastoid cells. In Chapter 3, I utilize the Cdc42 conditional knockout mice to address the role of Cdc42 in hematopoietic stem cell (HSC) maintenance. Adult HSCs exist in a relatively quiescent state in the bone marrow microenvironment to fulfill long term self-renewal and multi-lineage differentiation functions. However, the mechanism coordinating the quiescent state of HSCs and their retention in the bone marrow microenvironment remains poorly understood. We show that Cdc42 is a critical integrator of signals for the maintenance of HSC quiescence and interaction with the bone marrow niche. In Chapter 4 I have studied the contribution of Cdc42 to the highly orchestrated hematopoiesis. Our results show that Cdc42-deficiency in the hematopoietic system causes a severe disruption of multi-lineage differentiation and homeostasis at as early as stem cell and primitive progenitor stage, implicating Cdc42 as a key regulator of multi-lineage blood cell development and differentiation. Collectively, the results of these gene targeting studies clarify our understanding of the physiological role of Cdc42 that is likely cell-type and tissue-specific. Significantly, they shed light on the novel signaling functions of Cdc42 in mammalian hematopoiesis and hematopoietic stem cell regulation.