Despite CD40's role in stimulating dendritic cells (DCs) for efficient specific T-cell stimulation, its signal transduction components in DCs are still poorly documented. We show that CD40 receptors on human monocyte-derived DCs associate with sphingolipid- and cholesterol-rich plasma membrane microdomains, termed membrane rafts. Following engagement, CD40 utilizes membrane raft-associated Lyn Src family kinase, and possibly other raft-associated Src family kinases, to initiate tyrosine phosphorylation of intracellular substrates. CD40 engagement also leads to a membrane raft-restricted recruitment of tumor necrosis factor (TNF) receptor-associated factor (TRAF) 3 and, to a lesser extent, TRAF2, to CD40's cytoplasmic tail. Thus, the membrane raft structure plays an integral role in proximal events of CD40 signaling in DCs. We demonstrate that stimulation of Src family kinase within membrane rafts initiates a pathway implicating ERK activation, which leads to interleukin (IL)-1alpha/beta and IL-1Ra mRNA production and contributes to p38-dependent IL-12 mRNA production. These results provide the first evidence that membrane rafts play a critical role in initiation of CD40 signaling in DCs, and delineate the outcome of CD40-mediated pathways on cytokine production.