The small GTP-binding protein Rho has been shown to regulate the formation of the actin cytoskeleton in animal cells. We have previously isolated two rho genes, rho1+ and rho2+, from the fission yeast Schizosaccharomyces pombe in order to investigate the function of Rho using genetic techniques. In this paper, we report the cellular function of Rho1. We found that Rho1 is essential for cell viability and cell polarity using gene disruption and by exogenous expression of botulinum C3 ADP-ribosyltransferase. In cells expressing either a constitutively active Rho1 or a dominant-negative Rho1, actin patches were delocalized. Both the cell wall and secondary septum were thick and stratified in cells expressing the constitutively active Rho1, while the cell wall of cells expressing the dominant-negative Rho1 seemed to be loosely organized. Furthermore, inactivation of Rho1 is apparently required for the separation of daughter cells. Cell fractionation studies suggested that Rho1 is predominantly membrane-bound. Moreover, we observed that Rho1 is localized to the cell periphery and to the septum. Rho1 is involved in actin patch localization, the control of cell polarity, the regulation of septation, and cell wall synthesis.