The p21-activated kinase 3 (PAK3) is one of the recently identified genes for which mutations lead to nonsyndromic mental retardation. PAK3 is implicated in dendritic spine morphogenesis and is a key regulator of synaptic functions. However, the underlying roles of PAK3 in these processes remain poorly understood. We report here that the three mutations R419X, A365E, and R67C, responsible for mental retardation have different effects on the biological functions of PAK3. The R419X and A365E mutations completely abrogate the kinase activity. The R67C mutation drastically decreases the binding of PAK3 to the small GTPase Cdc42 and impairs its subsequent activation by this GTPase. We also report that PAK3 binds significantly more Cdc42 than Rac1 and is selectively activated by endogenous Cdc42, suggesting that PAK3 is a specific effector of Cdc42. Interestingly, the expression of the three mutated proteins in hippocampal neurons affects spinogenesis differentially. Both kinase-dead mutants slightly decrease the number of spines but profoundly alter spine morphology, whereas expression of the R67C mutant drastically decreases spine density. These results demonstrate that the Cdc42/PAK3 is a key module in dendritic spine formation and synaptic plasticity.