We recently demonstrated that in MCF-7 breast cancer cells, insulin promoted the phosphorylation and activation of geranylgeranyl transferase I (GGTI-I), increased the amounts of geranylgeranylated Rho-A, and potentiated the transactivating activity of lysophosphatidic acid (LPA) (Chappell, Golovchenko, Wall, Stjernholm, Leitner, Goalstone, and Draznin, J Biol Chem 275: 31792-31797, 2000). In the present study, we explored the mechanism of this potentiating effect of insulin on LPA. Insulin (10 nM) potentiated the ability of LPA to stimulate cell cycle progression and DNA synthesis in MCF-7 cells. The potentiating effect of insulin appears to involve increases in the expression of cyclin E and decreases in the expression of the cyclin dependent kinase inhibitor p27Kip1. All potentiating effects of insulin were inhibited in the presence of an inhibitor of GGTase I, GGTI-286 (3mM) or by an expression of a dominant negative mutant of Rho-A. In contrast to its potentiating action, a direct mitogenic effect of insulin in MCF-7 cells involves activation of phosphatidylinositol 3-kinase and increased expression of cyclin D1. We conclude that the ability of insulin to increase the cellular amounts of geranylgeranylated Rho-A results in potentiation of the LPA effect on cyclin E expression and degradation of p27Kip1 and cell cycle progression in MCF-7 breast cancer cells.