Ha-Ras and Ki-Ras have different distributions across plasma membrane microdomains. The Ras C-terminal anchors are primarily responsible for membrane micro-localization, but recent work has shown that the interaction of Ha-Ras with lipid rafts is modulated by GTP loading via a mechanism that requires the hypervariable region (HVR). We have now identified two regions in the HVR linker domain that regulate Ha-Ras raft association. Release of activated Ha-Ras from lipid rafts is blocked by deleting amino acids 173-179 or 166-172. Alanine replacement of amino acids 173-179 but not 166-172 restores wild type micro-localization, indicating that specific N-terminal sequences of the linker domain operate in concert with a more C-terminal spacer domain to regulate Ha-Ras raft association. Mutations in the linker domain that confine activated Ha-RasG12V to lipid rafts abrogate Raf-1, phosphoinositide 3-kinase, and Akt activation and inhibit PC12 cell differentiation. N-Myristoylation also prevents the release of activated Ha-Ras from lipid rafts and inhibits Raf-1 activation. These results demonstrate that the correct modulation of Ha-Ras lateral segregation is critical for downstream signaling. Mutations in the linker domain also suppress the dominant negative phenotype of Ha-RasS17N, indicating that HVR sequences are essential for efficient interaction of Ha-Ras with exchange factors in intact cells.