The soluble N-terminal ectodomain of amyloid precursor protein (sAPP), resulting from alpha-secretase-mediated proteolytic processing, has been shown to function as a growth factor for epithelial cells, including keratinocytes and thyrocytes. Extracellularly applied sAPP binds to a cell surface receptor and exhibits a patchy binding pattern reminiscent of that observed for raft proteins. Here we show that (i) the receptor-bound sAPP resides in a detergent-insoluble membrane microdomain which cofractionates in density gradients with cholesterol-rich membrane rafts and caveolae; (ii) the sAPP-binding microdomains are different from caveolae; and (iii) sAPP is capable of binding to isolated rafts and inducing tyrosine phosphorylation of some raft proteins. These observations suggest that a novel type of membrane raft is involved in sAPP signaling.