Raf-1 kinase is a central regulator of mitogenic signal pathways, whereas its general role in signal transduction of tumour necrosis factor (TNF) is less well defined. We have investigated mechanisms of Raf-1 regulation by TNF and its messenger ceramide in cell-free assays, insect and mammalian cell lines. In vitro, ceramide specifically bound to the purified catalytic domain and enhanced association with activated Ras proteins, but did not affect the kinase activity of Raf-1. Cell-permeable ceramides induced a marked increase of Ras-Raf-1 complexes in cells co-expressing Raf-1 and activated Ras. Likewise, a fast elevation of the endogeneous ceramide level, induced by TNF treatment of human Kym-1 rhabdomyosarcoma cells, was followed by stimulation of Ras-Raf-1 association without significant Raf-1 kinase activation. Failure of TNF or ceramide to induce Raf-1 kinase was observed in several TNF-responsive cell lines. Both TNF and exogeneous C6-ceramide interfered with the mitogenic activation of Raf-1 and ERK by epidermal growth factor and down-regulated v-Src-induced Raf-1 kinase activity. TNF also induced the translocation of Raf-1 from the cytosolic to the particulate fraction, indicating that this negative regulatory cross-talk occurs at the cell membrane. Interference with mitogenic signals at the level of Raf-1 could be an important initial step in TNF's cytostatic action.