Rho GTPases play an important role in diverse biological processes such as actin cytoskeleton organization, gene transcription, cell cycle progression and adhesion. They are required during early Drosophila development for proper execution of morphogenetic movements of individual cells and groups of cells important for the formation of the embryonic body plan. We isolated loss-of-function mutations in the Drosophila Rho1 (Rho1) gene during a genetic screen for maternal-effect mutations, allowing us to investigate the specific roles Rho1 plays in the context of the developing organism. Here we report that Rho1 is required for many early events: loss of Rho1 function results in both maternal and embryonic phenotypes. Embryos homozygous for the Rho1 mutation exhibit a characteristic zygotic phenotype, which includes severe defects in head involution and imperfect dorsal closure. Two phenotypes are associated with reduction of maternal Rho1 activity: the actin cytoskeleton is disrupted in egg chambers, especially in the ring canals and embryos display patterning defects as a result of improper maintenance of segmentation gene expression. Despite showing imperfect dorsal closure, Rho1 does not activate downstream genes or interact genetically with members of the JNK signaling pathway, used by its relatives dRac and dCdc42 for proper dorsal closure. Consistent with its roles in regulating actin cytoskeletal organization, we find that Rho1 interacts genetically and physically with the Drosophila formin homologue, cappuccino. We also show that Rho1 interacts both genetically and physically with concertina, a G(alpha) protein involved in cell shape changes during gastrulation.