E-cadherins play an essential role in maintaining epithelial polarity by forming calcium dependent adherens junctions between epithelial cells. Here, we report that calcium depletion induces E-cadherin ubiquitination and lysosomal degradation, and that Cdc42 plays an important role in regulating this process. We demonstrate that calcium depletion induces activation of Cdc42. This in turn upregulates EGFR signaling to mediate Src activation, leading to E-cadherin ubiquitination and lysosomal degradation. Silencing Cdc42 blocks activation of EGFR and Src induced by calcium depletion, resulting in a reduction in E-cadherin degradation. The role of Cdc42 in regulating E-cadherin ubiquitination and degradation is underscored by the fact that constitutively active Cdc42(F28L) increases the activity of EGFR and Src, and significantly enhances E-cadherin ubiquitination and lysosomal degradation. Furthermore, we found that GTP-dependent binding of Cdc42 to E-cadherin is critical for Cdc42 to induce the dissolution of adherens junctions. Our data support a model that activation of Cdc42 contributes to mesenchyme-like phenotype by targeting of E-cadherin for lysosomal degradation.