Understanding the mechanisms that drive the differentiation of dopaminergic (DA) neurons is crucial for successful development of novel therapies for Parkinson's disease, in which DA neurons progressively degenerate. However, the mechanisms underlying the differentiation-promoting effects of Wnt5a on DA precursors are poorly understood. Here, we present the molecular and functional characterization of a signaling pathway downstream of Wnt5a, the Wnt/Dvl/Rac1 pathway. First, we characterize the interaction between Rac1 and Dvl and identify the N-terminal part of Dvl3 as necessary for Rac1 binding. Next, we show that Tiam1, a Rac1 guanosine exchange factor (GEF), is expressed in the ventral midbrain, interacts with Dvl, facilitates Dvl-Rac1 interaction, and is required for Dvl- or Wnt5a-induced activation of Rac1. Moreover, we show that Wnt5a promotes whereas casein kinase 1 (CK1), a negative regulator of the Wnt/Dvl/Rac1 pathway, abolishes the interactions between Dvl and Tiam1. Finally, using ventral midbrain neurosphere cultures, we demonstrate that the generation of DA neurons in culture is impaired after Tiam1 knockdown, indicating that Tiam1 is required for midbrain DA differentiation. In summary, our data identify Tiam1 as a novel regulator of DA neuron development and as a Dvl-associated and Rac1-specific GEF acting in the Wnt/Dvl/Rac1 pathway.