The serine/threonine kinase C-Raf is a key mediator in cellular signaling. Translocation of Raf to membranes has been proposed to be facilitated by Ras proteins in their GTP-bound state. In this study we provide evidence that both purified B-and C-Raf kinases possess lipophilic properties and associate with phospholipid membranes. In the presence of phosphatidylserine and lipid second messengers such as phosphatidic acid and ceramides these associations were very specific with affinity constants (K D ) in the range of 0.5-50 nM. Raf association with liposomes was accompanied by displacement of 14-3-3 proteins and inhibition of Raf kinase activities. Interactions of Raf with cholesterol are of particular interest, since cholesterol has been shown to be involved, together with sphingomyelin and glycerophospholipids in the formation of specialized lipid microdomains called rafts. We demonstrate here that purified Raf proteins have moderate binding affinity for cholesterol. However, under conditions of lipid raft formation, Raf association with cholesterol (or rafts) increased dramatically. Since ceramides also support formation of rafts and interact with Raf we propose that Raf may be present at the plasma membrane in two distinct microdomains: in raft regions via association with cholesterol and ceramides and in non-raft regions due to interaction with phosphatidylserine and phosphatidic acid. At either location Raf kinase activity was inhibited by lipid binding in the absence or presence of Ras. Ras-Raf interactions with full-length C-Raf were studied both in solution and in phospholipid environment. Ras association with Raf was GTP dependent as previously demonstrated for C-Raf-RBD fragments. In the presence of liposomes the recruitment of C-Raf by reconstituted Ras-farnesyl was only marginal, since almost 70% of added C-Raf was bound by the lipids alone. Thus Ras-Raf binding in response to activation of Ras-coupled receptors may utilize Raf protein that is already present at the membrane.