Processes of cell survival, division, differentiation, and death are guided by the binding of signal molecules to receptors, which activates intracellular signaling networks and ultimately elicits genetic, biochemical, or biomechanical responses within the cell. While intracellular mechanisms for these processes have been well studied, little attention has been given to the role extracellular ligand transport and binding may play in signal initiation. Recent studies have found that the localization of receptors in lipid rafts is critical for the functions of many signaling pathways. By concentrating membrane components, rafts may promote essential interactions for signaling. Lipid rafts can also have negative effects on signaling, but mechanisms remain elusive. We propose that raft-mediated receptor clustering can reduce signaling by prolonging the diffusion of ligands to their receptors. We quantify this effect using a simple diffusion-limited binding model that accounts for the spatial distribution of lipid rafts and receptors on the cell surface. We find that receptor clustering can reduce the apparent rate of receptor binding by up to 80%, consistent with observed increases in epidermal growth factor (EGF) binding by up to 100% following disruption of lipid rafts (Pike and Casey [2002] Biochemistry 41:10315-10322; Roepstorff et al. [2002] J Biol Chem 277:18954-18960). Failure to account for the effects of receptor clustering on rates of ligand binding can skew the interpretation of current methods of cancer diagnosis and treatment. Finally, we discuss how the activation of particular signaling pathways can change over time, depending, in part, on the overall level and spatial distribution of the receptors. (c) 2005 Wiley Periodicals, Inc.