We have identified a gene, DRhoGEF2, which encodes a putative guanine nucleotide exchange factor belonging to the Dbl family of oncogenes. DRhoGEF2 function is essential for the coordination of cell shape changes during gastrulation. In the absence of maternal DRhoGEF2 gene activity, mesodermal and endodermal primordia fail to invaginate. The phenotype seen in DRhoGEF2 mutants is more severe than the defects associated with mutations in two previously identified gastrulation genes, folded gastrulation and concertina, suggesting that DRhoGEF2 acts in a signaling pathway independent of these genes. Expression of dominant-negative DRhoA during gastrulation results in phenocopies of the DRhoGEF2 mutant, suggesting that a signaling cascade involving DRhoGEF2 and the small GTPase DRhoA is responsible for the regulation of cell shape changes during early Drosophila morphogenesis.