fThe adhesion class G protein-coupled receptors (adhesion-GPCRs) play important roles in diverse biological processes ranging from immunoregulation to tissue polarity, angiogenesis, and brain development. These receptors are uniquely modified by selfcatalytic cleavage at a highly conserved GPCR proteolysis site (GPS) dissecting the receptor into an extracellular subunit (␣) and a seven-pass transmembrane subunit () with cellular adhesion and signaling functions, respectively. Using the myeloid cellrestricted EMR2 receptor as a paradigm, we exam the mechanistic relevance of the subunit interaction and demonstrate a critical role for GPS autoproteolysis in mediating receptor signaling and cell activation. Interestingly, two distinct receptor complexes are identified as a result of GPS proteolysis: one consisting of a noncovalent ␣- heterodimer and the other comprising two completely independent receptor subunits which distribute differentially in membrane raft microdomains. Finally, we show that receptor ligation induces subunit translocation and colocalization within lipid rafts, leading to receptor signaling and inflammatory cytokine production by macrophages. Our present data resolve earlier conflicting results and provide a new mechanism of receptor signaling, as well as providing a paradigm for signal transduction within the adhesion-GPCR family.T he adhesion-class G protein-coupled receptors (adhesion-GPCRs) constitute the second largest GPCR subfamily, whose 33 members are expressed restrictedly in cells of the central nervous, immune, and/or reproductive systems (2, 53). Adhesion-GPCRs are uniquely characterized by the chimeric composition of a large extracellular domain (ECD) and a seven-pass transmembrane (7TM) region. While the 7TM region is predicted to transduce cellular signals, the ECD of adhesion-GPCRs contains multiple repeats of protein modules such as the lectin-like, immunoglobulin (Ig)-like, epidermal growth factor (EGF)-like, and cadherinlike motifs known to mediate protein-protein interaction (2, 53). Adhesion-GPCRs are thus thought to possess a dual cellular adhesion and signaling function. Recent studies have revealed many important functions for adhesion-GPCRs: these include development of the brain frontal cortex (34), circulation of cerebrospinal fluid (44), central nervous system (CNS)-restricted angiogenesis and vascularization (1, 10, 21), myelination of Schwann cells (30, 31), Usher syndrome (29, 49), cellular polarity (16, 23), epididymal fluid regulation and male fertility (4, 12), and immune recognition and regulation (11,18,27,47), as well as tumor growth and metastasis (8,17,43,50). However, the molecular mechanisms mediating the biological functions of adhesion-GPCRs remain to be fully characterized.In addition to the large mosaic ECD, the complex pre-and posttranslational modifications that produce multiple receptor isoforms and the lack of defined ligands also present a great challenge in deciphering the molecular mechanisms of adhesion-GPCRs. Of note is the conserved prot...