The coordinate modulation of cadherin and integrin functions plays an essential role in fundamental physiological and pathological processes, including morphogenesis and cancer. However, the molecular mechanisms underlying the functional crosstalk between cadherins and integrins are still elusive. Here, we demonstrate that the small GTPase Rap1, a crucial regulator of the inside-out activation of integrins, is a target for E-cadherin-mediated outside-in signaling. In particular, we show that a strong activation of Rap1 occurs upon adherens junction disassembly that is triggered by E-cadherin internalization and trafficking along the endocytic pathway. By contrast, Rap1 activity is not influenced by integrin outside-in signaling. Furthermore, we demonstrate that the E-cadherin endocytosis-dependent activation of Rap1 is associated with and controlled by an increased Src kinase activity, and is paralleled by the colocalization of Rap1 and E-cadherin at the perinuclear Rab11-positive recycling endosome compartment, and the association of Rap1 with a subset of E-cadherin-catenin complexes that does not contain p120ctn. Conversely, Rap1 activity is suppressed by the formation of E-cadherin-dependent cell-cell junctions as well as by agents that inhibit either Src activity or E-cadherin internalization and intracellular trafficking. Finally, we demonstrate that the E-cadherin endocytosis-dependent activation of Rap1 is associated with and is required for the formation of integrin-based focal adhesions. Our findings provide the first evidence of an E-cadherin-modulated endosomal signaling pathway involving Rap1, and suggest that cadherins may have a novel modulatory role in integrin adhesive functions by fine-tuning Rap1 activation.