The production of phosphatidic acid plays a crucial role in the activation of the ERK cascade. This role was linked to the binding of phosphatidate to a specific polybasic site within the kinase domain of Raf-1. Here we show that phosphatidate promotes ERK phosphorylation in intact cells but does not activate Raf in vitro. The kinase suppressor of Ras (KSR) contains a sequence homologous to the phosphatidate binding site of Raf-1. Direct binding of phosphatidate to synthetic peptides derived from the sequences of the binding domains of Raf-1 and KSR was demonstrated by spectroscopic techniques. The specificity of these interactions was confirmed using synthetic lipids and mutated peptides in which the core of the phosphatidic acid binding domain was disrupted. Insulin and exogenous dioleoyl phosphatidate induced a rapid translocation of a mouse KSR1-EGFP construct to the plasma membrane of HIRcB cells. Mutation of two arginines located in the core of the putative phosphatidate binding site abolished dioleoyl phosphatidate- and insulin-induced translocation of KSR1. Overexpression of the mutant KSR1 in HIRcB cells inhibited insulin-dependent MEK and ERK phosphorylation. The addition of dioleoyl phosphatidate or insulin increased the co-localization of KSR1 and H-Ras and promoted the formation of plasma membrane patches enriched in both proteins and phosphatidic acid. These results, in conjunction with our previous work, suggest the formation of phosphatidate-enriched membrane microdomains that contain all components of the ERK cascade. We propose that these domains act as molecular scaffolds in the coupling of signaling events.