Candida albicans, the most prevalent fungal pathogen of humans, causes superficial mycoses, invasive mucosal infections, and disseminated systemic disease. Many studies have shown an intriguing association between C. albicans morphogenesis and the pathogenesis process. For example, hyphal cells have been observed to penetrate host epithelial cells at sites of wounds and between cell junctions. Ras- and Rho-type GTPases regulate many morphogenetic processes in eukaryotes, including polarity establishment, cell proliferation, and directed growth in response to extracellular stimuli. We found that the C. albicans Ras-like GTPase Rsr1p and its predicted GTPase-activating protein Bud2p localized to the cell cortex, at sites of incipient daughter cell growth, and provided landmarks for the positioning of daughter yeast cells and hyphal cell branches, similar to the paradigm in the model yeast Saccharomyces cerevisiae. However, in contrast to S. cerevisiae, CaRsr1p and CaBud2p were important for morphogenesis: C. albicans strains lacking Rsr1p or Bud2p had abnormal yeast and hyphal cell shapes and frequent bends and promiscuous branching along the hypha and were unable to invade agar. These defects were associated with abnormal actin patch polarization, unstable polarisome localization at hyphal tips, and mislocalized septin rings, consistent with the idea that GTP cycling of Rsr1p stabilizes the axis of polarity primarily to a single focus, thus ensuring normal cell shape and a focused direction of polarized growth. We conclude that the Rsr1p GTPase functions as a polarity landmark for hyphal guidance and may be an important mediator of extracellular signals during processes such as host invasion.