Dact1 (Dapper/Frodo), an interactor with Dishevelled and Catenin proteins that can modulate Wnt signaling, is located at synapses and involved in development of dendritic spines, structures that support excitatory postsynaptic contacts. Hippocampal neurons from Dact1 knockout mice have simpler dendritic arbors and fewer spines than hippocampal neurons from wild type littermates. This correlates with reductions in excitatory synapses and miniature excitatory postsynaptic currents. In contrast, inhibitory synapses are not affected by loss of Dact1, revealing a differential requirement for this protein in the development of excitatory and inhibitory synapses. Loss of Dact1 results in loss of active Rac, and recombinant expression of either Dact1 or constitutively active Rac, but not Rho or Cdc42, rescues dendrite and spine phenotypes in Dact1 mutant hippocampal neurons. Combined with other evidence, this suggests that the function of Dact1 during these aspects of neuronal differentiation are mediated through activation of Rac.