SIRPα, an ITIMs-containing signaling receptor, negatively regulates leukocyte responses through extracellular interactions with CD47. However, the dynamics of SIRPα-CD47 interactions on the cell surface and the governing mechanisms remain unclear. Here we report that while the purified SIRPα binds to CD47 and that SIRPα is expressed on monocytes and monocytic THP-1 or U937, these SIRPα are ineffective to mediate cell binding to immobilized CD47. However, cell binding to CD47 is significantly enhanced when monocytes transmigrating across endothelia, or being differentiated into macrophages. Cell surface labeling reveals SIRPα to be diffused on naïve monocytes but highly clustered on transmigrated monocytes and macrophages. Protein crosslink and equilibrium centrifugation confirm that SIRPα in the latter cells forms oligomerized complexes resulting in increased avidity for CD47 binding. Furthermore, formation of SIRPα complexes/clusters requires the plasma membrane 'lipid rafts' and the activity of Src family kinase during macrophage differentiation. These results together suggest that 'clustering' SIRPα into plasma membrane microdomains is essential for activated monocytes and macrophages to effectively interact with CD47 and initiate intracellular signaling.