The p21-activated kinases (PAKs) are effectors for the Rho-family GTPase Cdc42p. Here we define the in vivo function of the kinase activity of the budding yeast PAK Cla4p, using cla4 alleles that are specifically inhibited by a cell-permeable compound that does not inhibit the wild-type kinase. CLA4 kinase inhibition in cells lacking the partially redundant PAK Ste20p causes reversible SWE1-dependent cell-cycle arrest and gives rise to narrow, highly elongated buds in which both actin and septin are tightly polarized to bud tips. Inhibition of Cla4p does not prevent polarization of F-actin, and cytokinesis is blocked only in cells that have not formed a bud before inhibitor treatment; cell polarization and bud emergence are not affected by Cla4p inhibition. Although localization of septin to bud necks is restored in swe1Delta cells, cytokinesis remains defective. Inhibition of Cla4p activity in swe1Delta cells causes a delay of bud emergence after cell polarization, indicating that this checkpoint may mediate an adaptive response that is capable of promoting budding when Cla4p function is reduced. Our data indicate that CLA4 PAK activity is required at an early stage of budding, after actin polarization and coincident with formation of the septin ring, for early bud morphogenesis and assembly of a cytokinesis site.