Rab5 is a small GTPase involved in the control of intracellular trafficking, both at the level of receptor endocytosis and endosomal dynamics. The finding that Rab5 can be activated by receptor tyrosine kinases (RTK) raised the question of whether it also participates in effector pathways emanating from these receptors. Here we show that Rab5 is indispensable for a form of RTK-induced actin remodelling, called circular ruffling. Three independent signals, originating from Rab5, phosphatidylinositol-3-OH kinase and Rac, respectively, are simultaneously required for the induction of circular ruffles. Rab5 signals to the actin cytoskeleton through RN-tre, a previously identified Rab5-specific GTPase-activating protein (GAP). Here we demonstrate that RN-tre has the dual function of Rab5-GAP and Rab5 effector. We also show that RN-tre is critical for macropinocytosis, a process previously connected to the formation of circular ruffles. Finally, RN-tre interacts with both F-actin and actinin-4, an F-actin bundling protein. We propose that RN-tre establishes a three-pronged connection with Rab5, F-actin and actinin-4. This may aid crosslinking of actin fibres into actin networks at the plasma membrane. Thus, we have shown that Rab5 is a signalling GTPase and have elucidated the major molecular elements of its downstream pathway.