T cell activation is associated with the partitioning of TCRs and other signaling proteins, forming an immunological synapse. This study demonstrates a novel function for the CD4 coreceptor in regulating molecular clustering at the immunological synapse site. We show using transgenic mouse and retroviral reconstitution studies that CD4 is required for TCR/protein kinase C (PKC) θ clustering. Specifically, we demonstrate that CD4 palmitoylation sequences are required for TCR/PKCθ raft association and subsequent clustering, indicating a particular role for raft-associated CD4 molecules in regulating immune synapse organization. Although raft association of CD4 is necessary, it is not sufficient to mediate clustering, as cytoplasmic tail deletion mutants are able to localize to rafts, but are unable to mediate TCR/PKCθ clustering, indicating an additional requirement for CD4 signaling. These studies suggest that CD4 coreceptor function is regulated not only through its known signaling function, but also by posttranslational lipid modifications which regulate localization of CD4 in lipid rafts.