The Rho family of small GTPases has been implicated in many neurological disorders including mental retardation, but whether they are involved in primary microcephaly (microcephalia vera) is unknown. Here, we examine the role of Rac1 in mammalian neural progenitors and forebrain development by a conditional gene-targeting strategy using the Foxg1-Cre line to delete floxed-Rac1 alleles in the telencephalic ventricular zone (VZ) of mouse embryos. We found that Rac1 deletion in the telencephalic VZ progenitors resulted in reduced sizes of both the striatum and cerebral cortex. Analyses further indicated that this abnormality was caused by accelerated cell-cycle exit and increased apoptosis during early corticogenesis (approximately E14.5), leading to a decrease of the neural progenitor pool in mid-to-late telencephalic development (E16.5 to E18.5). Moreover, the formation of patch-matrix compartments in the striatum was impaired by Rac1-deficiency. Together, these results suggest that Rac1 regulates self-renewal, survival, and differentiation of telencephalic neural progenitors, and that dysfunctions of Rac1 may lead to primary microcephaly.