The Rho small GTPase has been implicated in many cellular processes, including actin cytoskeletal regulation and transcriptional activation. The molecular mechanisms underlying Rho function in many of these processes are not yet clear. Here we report that in Drosophila, reduction of maternal Rho1 compromises signaling pathways consistent with defects in membrane trafficking events. These mutants fail to maintain expression of the segment polarity genes engrailed (en), wingless (wg), and hedgehog (hh), contributing to a segmentation phenotype. Formation of the Wg protein gradient involves the internalization of Wg into vesicles. The number of these Wg-containing vesicles is reduced in maternal Rho1 mutants, suggesting a defect in endocytosis. Consistent with this, stripes of cytoplasmic beta-catenin that accumulate in response to Wg signaling are narrower in these mutants relative to wild type. Additionally, the amount of extracellular Wg protein is reduced in maternal Rho1 mutants, indicating a defect in secretion. Signaling pathways downregulated by endocytosis, such as the epidermal growth factor receptor (EGFR) and Torso pathways, are hyperactivated in maternal Rho1 mutants, consistent with a general role for Rho1 in regulating signaling events governing proper patterning during Drosophila development.