Activation of the serine/threonine kinase c-Raf-1 requires membrane localization, phosphorylation, and oligomerization. To study these mechanisms of Raf activation more precisely, we have used a membrane-localized fusion protein, myr-Raf-GyrB, which can be activated by coumermycin-induced oligomerization in NIH3T3 transfectants. By introducing a series of point mutations into the myr-Raf-GyrB kinase domain (S338A, S338A/Y341F, Y340F/Y341F, and T491A/S494A) we can separately study the role that membrane localization, phosphorylation, and oligomerization play in the process of Raf activation. We find that phosphorylation of Ser-338 plays a critical role in Raf activation and that this requires membrane localization but not oligomerization of Raf. Mutation of Tyr-341 had a limited effect, whereas mutation of both Ser-338 and Tyr-341 resulted in a synergistic loss of Raf activation following coumermycin-induced dimerization. Importantly, we found that membrane localization and phosphorylation of Ser-338 were not sufficient to activate Raf in the absence of oligomerization. Thus, our studies suggest that three key steps are required for optimal Raf activation: recruitment to the plasma membrane by GTP-bound Ras, phosphorylation via membrane-resident kinases, and oligomerization.