E-selectin, an endothelial cell surface adhesion receptor for leukocytes, also acts as a signaling receptor. Upon multivalent ligation, E-selectin transduces outside-in signals into the endothelium leading to changes in intracellular Ca(2+) concentration and activation of the mitogen-activated protein kinase signaling pathway. In addition, following leukocyte engagement, E-selectin associates via its cytoplasmic domain with components of the actin cytoskeleton and undergoes alterations in phosphorylation state that result in changes in gene expression. In this study, we show that E-selectin is localized in cholesterol-rich lipid rafts at the cell surface, and that upon ligation E-selectin clusters and redistributes in the plasma membrane colocalizing with a fraction of caveolin-1-containing rafts. In addition, we demonstrate that leukocyte adhesion via E-selectin results in association with and activation of phospholipase Cgamma (PLCgamma). Moreover, we show that disruption of lipid rafts with the cholesterol-depleting drug methyl-beta-cyclodextrin disrupts the raft localization of E-selectin as well as the ligation-induced association of E-selectin with PLCgamma, and subsequent tyrosine phosphorylation of PLCgamma. In contrast, cholesterol depletion has no effect on E-selectin-dependent mitogen-activated protein kinase activation. Thus, these findings demonstrate that the presence of E-selectin in lipid rafts is necessary for its association with, and activation of, PLCgamma, and suggest that this subcellular localization of E-selectin is related to its signaling function(s) during leukocyte-endothelial interactions.