RAC1 and its alternatively spliced isoform, RAC1B, are members of the Rho family of GTPases. Both isoforms are involved in the regulation of actin cytoskeleton remodeling, cell motility, cell proliferation, and epithelial–mesenchymal transition (EMT). Compared to RAC1, RAC1B exhibits a number of distinctive features with respect to tissue distribution, downstream signaling and a role in disease conditions like inflammation and cancer. The subcellular locations and interaction partners of RAC1 and RAC1B vary depending on their activation state, which makes RAC1 and RAC1B ideal candidates to establish cross-talk with cancer-associated signaling pathways—for instance, interactions with signaling by transforming growth factor β (TGFβ), a known tumor promoter. Although RAC1 has been found to promote TGFβ-driven tumor progression, recent observations in pancreatic carcinoma cells surprisingly revealed that RAC1B confers anti-oncogenic properties, i.e., through inhibiting TGFβ-induced EMT. Since then, an unexpected array of mechanisms through which RAC1B cross-talks with TGFβ signaling has been demonstrated. However, rather than being uniformly inhibitory, RAC1B interacts with TGFβ signaling in a way that results in the selective blockade of tumor-promoting pathways, while concomitantly allowing tumor-suppressive pathways to proceed. In this review article, we are going to discuss the specific interactions between RAC1B and TGFβ signaling, which occur at multiple levels and include various components such as ligands, receptors, cytosolic mediators, transcription factors, and extracellular inhibitors of TGFβ ligands.