Syndecan heparan sulphate proteoglycans directly mediate a novel endocytic pathway. Using Chinese hamster ovary cells expressing the human syndecan 1 core protein or a chimaeric receptor, FcR-Synd, consisting of the ectodomain of the IgG Fc receptor Ia linked to the transmembrane and cytoplasmic domains of syndecan 1, we previously reported that efficient internalization is triggered by ligand clustering, requires intact actin microfilaments and tyrosine kinases, proceeds with a t_1/2 of approx. 1h and is distinct from coated-pit pathways. We have now examined the involvement of cholesterol-rich, detergent-insoluble membrane rafts. On clustering, ¹²⁵I-labelled IgG bound to FcR-Synd rapidly became insoluble in cold Triton X-100, well before endocytosis. Insolubility of clustered FcR-Synd ligand did not require the syndecan ectodomain, linkage of the cytoplasmic tail to the cytoskeleton, or energy-dependent cellular metabolism. Pretreatment of cells with cyclodextrin to deplete cholesterol from rafts abolished insolubility of the clustered ligand and inhibited endocytosis in a dose-responsive fashion. Similar results were obtained with ¹²⁵I-labelled lipoprotein lipase bound to authentic cell-surface syndecan. In contrast, the 39kDa receptor-associated protein (RAP), a coated-pit ligand, was more than 80% soluble in cold Triton even after internalization; cellular cholesterol depletion failed to substantially affect the internalization of ¹²⁵I-RAP. Overall, our results indicate a multi-step endocytic process consisting of ligand binding, clustering, energy-independent lateral movement into detergent-insoluble membrane rafts and finally recruitment of actin and tyrosine kinases to bring the ligands into the cell.