Syndecan-4 is a heparan sulfate-carrying core protein that has been directly implicated in fibroblast growth factor 2 (FGF2) signaling. Recent studies have suggested that many signaling proteins localize to the raft compartment of the plasma cell membrane. To establish whether syndecan-4 is present in the raft compartment, we have studied the distribution of the core protein and an Fc receptor (FcR)-syndecan-4 chimera prior to and following clustering with FGF2 or antibodies. Whereas unclustered syndecan-4 was present predominantly in the non-raft membrane compartment, clustering induced extensive syndecan-4 redistribution to the rafts as demonstrated by the sucrose gradient centrifugation and life confocal microscopy. Although syndecan-4 and caveolin-1 moved in tandem, syndecan-4 was not present in caveolae, a major subset of raft compartments. We conclude that syndecan-4 clustering induces its redistribution to the non-caveolae raft compartment. This process may play an important role in syndecan-4-mediation of FGF2 signaling.