To determine how tetraspanin KAI1/CD82, a tumor metastasis suppressor, inhibits cell migration, we assessed which cellular events critical for motility are altered by KAI1/CD82 and how KAI1/CD82 regulates these events. We found that KAI1/CD82-expressing cells typically exhibited elongated cellular tails and diminished lamellipodia. Live imaging demonstrated that the polarized protrusion and retraction of the plasma membrane became deficient upon KAI1/CD82 expression. The deficiency in developing these motility-related cellular events was caused by poor formations of actin cortical network and stress fiber and by aberrant dynamics in actin organization. Rac1 activity was reduced by KAI1/CD82, consistent with the diminution of lamellipodia and actin cortical network; while the growth factor-stimulated RhoA activity was blocked by KAI1/CD82, consistent with the loss of stress fiber and attenuation in cellular retraction. Upon KAI1/CD82 expression, Rac effector cofilin was not enriched at the cell periphery to facilitate lamellipodia formation while Rho kinase exhibited a significantly lower activity leading to less retraction. Phosphatidylinositol 4, 5-biphosphate, which initiates actin polymerization from the plasma membrane, became less detectable at the cell periphery in KAI1/CD82-expressing cells. Moreover, KAI1/CD82-induced phenotypes likely resulted from the suppression of multiple signaling pathways such as integrin and growth factor signaling. In summary, at the cellular level KAI1/CD82 inhibited polarized protrusion and retraction events by disrupting actin reorganization; at the molecular level, KAI1/CD82 deregulated Rac1, RhoA, and their effectors cofilin and Rho kinase by perturbing the plasma membrane lipids.