Nerve growth factor (NGF) acts through its receptor, TrkA, to elicit the neuronal differentiation of PC12 cells through the action of extracellular signal-regulated kinase 1 (ERK1) and ERK2. Upon NGF binding, TrkA translocates and concentrates in cholesterol-rich membrane microdomains or lipid rafts, facilitating formation of receptor-associated signaling complexes, activation of downstream signaling pathways, and internalization into endosomes. We have investigated the mechanisms responsible for the localization of TrkA within lipid rafts and its ability to activate ERK1 and ERK2. We report that NGF treatment results in the translocation of activated forms of TrkA to lipid rafts, and this localization is important for efficient activation of the ERKs. TrkA is recruited and retained within lipid rafts through its association with flotillin, an intrinsic constituent of these membrane microdomains, via the adapter protein, c-Cbl associated protein (CAP). Mutant forms of CAP that lack protein interaction domains block TrkA localization to lipid rafts and attenuate ERK activation. Importantly, suppression of endogenous CAP expression inhibited NGF-stimulated neurite outgrowth from primary dorsal root ganglion neurons. These data provide a mechanism for the lipid raft localization of TrkA and establish the importance of the CAP adaptor protein for NGF activation of the ERKs and neuronal differentiation.