We investigated the structural and functional alterations of active lamellae during initial cell–cell collision and establishment of cell–cell contacts in wounded cultures of nontransformed rat epitheliocytes (IAR-2 line) and their ras-transformed descendants (C4 line). Typically, the leading edges of nontransformed cells formed multiple transient contacts followed by establishment of small, stable contacts that would undergo lateral expansion. Formation and expansion of the contact area was accompanied by accumulation of the cell–cell adhesion molecules E-cadherin, β-catenin, and plakoglobin. During lateral expansion, the circumferential bundles of actin filaments, characteristic of IAR-2 cells, disassembled at the site of stable contact forming a concave arc-like actin bundle between adjacent cells at the expanding edge. Pseudopodial activity was completely inhibited in the contact zone and partially inhibited at the free lamellar edges adjacent to the zone of contact. Con A-coated beads on the plasma membrane at the zone of contact stopped undergoing centripetal transport but now moved along the cell–cell boundary. On the other hand, ras-transformed cells developed overlapping lamellae and exhibited no detectable change in activity of lamellae, localization of adhesion molecules, and organization of the actin cytoskeleton. We propose that contact-induced reorganization of cell surface adhesion molecules and the underlying cortical cytoskeleton leads to development of lateral traction that may be an essential element in inducing expansion of the contact and in inhibiting local pseudopodial activity.