Rac1 is among the best-characterized Rho family GTPases and functions to regulate a wide variety of processes including actin remodeling and gene expression. The C-terminal polybasic region of Rac1 functions both as a plasma membrane targeting motif and as a nuclear localization sequence (NLS). Here we show that the polyproline sequence N-terminal to the polybasic region contributes to the NLS and that the NLS is cryptic in the sense that it is strongly inhibited by the adjacent geranylgeranyl cysteine. Using subcellular fractionation we show for the first time that endogenous Rac1 is nuclear and that at least a portion of this pool of Rac1 remains prenylated. Cell cycle blocking agents, synchronization of cells stably expressing low levels of GFP-Rac1, and time-lapse microscopy of asynchronous cells revealed Rac1 peak accumulation in G2, but exclusion in early G1. We explored what role Rac1 may play in the nucleus, showing that activated, unprenylated Rac1, which expressed constitutively in the nucleus, significantly accelerated the mitotic rate whereas constitutively active Rac1 restricted to the cytoplasm inhibited cell division. In addition, we found unprenylated nuclear localized Rac1 was associated with increased NF-κB driven luciferase expression, nuclear translocation of YFP-RelA, and protection against UV induced apoptosis. We show that Pak1 is required for nuclear Rac1 mediated luciferase expression, implicating this effector in a nuclear localized signaling pathway. Finally we show two external stimuli, UV and expression of YopT, a prenylcysteine endoprotease, relocalize Rac1 into the nucleus. Consistent with our results, YopT expression was associated with increased NF-κB driven luciferase expression, nuclear translocation of YFP-RelA, and protection against UV induced apoptosis in a Rac1 dependent manner. These results show that Rac1 cycles in and out of the nucleus during the cell cycle and that localization of Rac1 in the nucleus promotes cell division and is associated with Pak1 mediated NF-κB activation.