CEA functions as an intercellular adhesion molecule and is up-regulated in a wide variety of human cancers, including colon, breast and lung. Its over-expression inhibits cellular differentiation, blocks cell polarization, distorts tissue architecture, and inhibits anoikis of many different cell types. Here we report results concerning the molecular mechanism involved in these biological effects, where relatively rapid molecular changes not requiring alterations in gene expression were emphasized. Confocal microscopy experiments showed that antibody-mediated clustering of a deletion mutant of CEA (DeltaNCEA), normally incapable of self binding and clustering, led to the co-localization of integrin alpha5beta1 with patches of DeltaNCEA on the cell surface. Activation of alpha5, as defined by an anti-alpha5 mAb-sensitive increase in cell adhesion to immobilized fibronectin, and an increased binding of soluble fibronectin to cells, was also observed. This was accompanied by the recruitment of integrin-linked kinase (ILK), protein kinase B (PKB/Akt), and the mitogen-activated protein kinase (MAPK) to membrane microdomains and the phosphorylation of Akt and MAPK. Inhibition of PI3-K and ILK, but not MAPK, prevented the alpha5beta1 integrin activation. Conversely, anti-alpha5 antibody inhibited the PI3-K-mediated activation of Akt, implying the involvement of outside-in and inside-out signaling in integrin activation. Therefore we propose that CEA-mediated signaling involves clustering of CEA and co-clustering and activation of the alpha5beta1 and associated specific signaling elements on the internal surfaces of membrane microdomains. These changes may represent a molecular mechanism for the biological effects of CEA.