Rho GTPases of the Ras superfamily are involved in the regulation of multiple cell functions and have been implicated in the pathology of various human diseases including cancer. They are attractive drug targets in future targeted therapy. A wealth of structure-function information made available by high resolution structures and mutagenesis studies has laid out the foundation for the derivation of a mechanism-based targeting strategy. Here we describe the rational design and characterizations of a first generation Rac-specific small molecule inhibitor. Based on the structure-function information of Rac interaction with GEFs, in a computer based Virtual Screening we have identified NSC23766, a highly soluble and membrane permeable compound, as a specific inhibitor of a subset of GEF binding to Rac and therefore Rac activation. In fibroblast cells NSC23766 inhibited Rac1 GTP-loading without affecting Cdc42 or RhoA activity and suppressed the Rac-GEF, Tiam1, and oncogenic Ras induced cell growth and transformation. NSC23766 also potently inhibited the prostate PC-3 cancer cell proliferation and invasion induced by Rac hyperactivation. Intraperitoneal administration of NSC23766 to laboratory mice resulted in effective Rac GTPase suppression and hematopoietic stem cell mobilization from the bone marrow to the peripheral blood, similar to the effects of genetically targeted disruption of Rac GTPases in the animals. A co-crystal structure of NSC23766 bound to Rac1 provided further insight for future medicinal chemistry modification and improvement of this lead Rac-specific inhibitor. Thus, structure-function based rational design may represent a new avenue for generating lead small molecule inhibitors of Ras superfamily GTPases that are useful for modulating pathological conditions in which the small GTPase deregulation may play a role.