CD44 is the principal cell surface receptor for extracellular matrix glycosaminoglycan hyaluronan. CD44-hyaluronan mediated cell adhesion is important in several pathophysiological processes such as inflammation and metastatic spread of cancer cells. It has been recently recognized that CD44 also functions as a signaling receptor in a variety of cell types. Cell stimulation by monoclonal anti-CD44 antibody or natural CD44 ligands activate several signaling pathways that culminate in cell proliferation, cytokine secretion, chemokine gene expression and cytolytic effector functions. One of the earliest signaling events following stimulation via CD44 is tyrosine phosphorylation of intracellular proteins substrates, and CD44 mediated cellular activation could be abolished by protein tyrosine kinase (PTK) inhibitors. The Src-family non-receptor PTKs such as Lck, Fyn, Lyn and Hck were shown to be coupled to CD44 via sphingolipid-rich microdomains (lipid rafts) of the plasma membrane. Studies on T cell receptor and IgE receptor mediated signaling in lymphocytes and mast cells have consolidated the notion that microdomains consist of signaling platforms where components of multiple signaling pathways are assembled. Co-isolation of CD44 with microdomains strongly suggests that CD44 generates cellular activation signals utilizing the signaling machinery of the plasma membrane microdomains.