The Ras homolog enriched in striatum, Rhes, is the product of a thyroid hormone-regulated gene during brain development. Rhes and the dexamethasone-induced Dexras1 define a novel distinct subfamily of proteins within the Ras family, characterized by an extended variable domain in the carboxyl terminal region. We have carried this study because there is a complete lack of knowledge on Rhes signaling. We show that in PC12 cells, Rhes is targeted to the plasma membrane by farnesylation. We demonstrate that about 30% of the native Rhes protein is bound to GTP and this proportion is unaltered by typical Ras family nucleotide exchange factors. However, Rhes is not transforming in murine fibroblasts. We have also examined the role of Rhes in cell signaling. Rhes does not stimulate the ERK pathway. By contrast, it binds to and activates PI3K. On the other hand, we demonstrate that Rhes impairs the activation of the cAMP/PKA pathway by thyroid-stimulating hormone, and by an activated beta2 adrenergic receptor by a mechanism that suggests uncoupling of the receptor to its cognate heterotrimeric complex. Overall, our results provide the initial insights into the role in signal transduction of this novel Ras family member.