Rho GTPases and their downstream effectors regulate changes in the actin 
cytoskeleton that underlie cell motility and adhesion. They also participate, 
with RhoA, in the regulation of gene transcription by activating serum response 
factor (SRF)-mediated transcription from the serum response element (SRE). 
SRF-mediated transcription is also promoted by several proteins that regulate 
the polymerization or stability of actin. We have previously identified a family 
of PP2C phosphatases, POPXs, which can dephosphorylate the CDC42/RAC-activated 
kinase PAK and downregulate its enzymatic and actin cytoskeletal activity. We 
now report that POPX2 interacts with the formin protein mDia1 (DIAPH1). This 
interaction is enhanced when mDia1 is activated by RhoA. The binding of POPX2 to 
mDia1 or to an mDia-containing complex greatly decreases the ability of mDia1 to 
activate transcription from the SRE. We propose that the interaction between 
mDia1 and POPX2 (PPM1F) serves to regulate both the actin cytoskeleton and 
SRF-mediated transcription, and to link the CDC42/RAC1 pathways with those of 
RhoA.