Receptor-mediated signal transduction by G protein-coupled receptors can involve redistribution of plasma membrane receptors into membrane structures that are characterized by insolubility in Triton X-100 and low buoyant density in sucrose gradients. Here we describe the translocation of wild-type rat LH receptors from the bulk membrane into membrane microdomains (rafts) following the binding of human chorionic gonadotropin (hCG). In sucrose gradient ultracentrifugation of plasma membranes from cells stably expressing FLAG-tagged LHR-wt, receptors were located in high density membrane fractions before binding of hormone and in low density fractions following hCG treatment. Receptor translocation to low density sucrose fractions did not occur when cells were pretreated with 1% methyl--cyclodextrin (MCD) which reduces membrane cholesterol and disrupts rafts. Single particle tracking of individual FLAG-LHR-wt receptors showed that hCG-treated receptors become confined in small compartments with a diameter of 86 ± 36 nm, significantly smaller than 230 ± 79 nm diameter regions accessed by the untreated receptor. Receptors were no longer confined in these small compartments after disruption of rafts by MCD, a treatment which also decreased levels of cAMP in response to hCG. Finally, translocation of LH receptors into rafts required a functional hormone-receptor complex but did not occur after extensive receptor crosslinking which elevated cAMP levels. Thus, retention of LHR in rafts or small membrane compartments is a characteristic of functional, hormone-occupied LHR-wt. Although raft translocation was not essential for cAMP production, it may be necessary for optimizing hormone-mediated signaling.