Chemokines and their receptors function in migration and homing of cells to target tissues. Recent evidence suggests that cancer cells use a chemokine receptor axis for metastasis formation at secondary sites. Previously, we showed that binding of the chemokine CXCL12 to its receptor CXCR4 mediated signaling events resulting in matrix metalloproteinase-9 expression in prostate cancer bone metastasis. A variety of methods, including lipid raft isolation, stable overexpression of CXCR4, cellular adhesion, invasion assays, and the severe combined immunodeficient–human bone tumor growth model were used. We found that (a) CXCR4 and HER2 coexist in lipid rafts of prostate cancer cells; (b) the CXCL12/CXCR4 axis results in transactivation of the HER2 receptor in lipid rafts of prostate cancer cells; (c) Src kinase mediates CXCL12/CXCR4 transactivation of HER2 in prostate cancer cells; (d) a pan-HER inhibitor desensitizes CXCR4-induced transactivation and subsequent matrix metalloproteinase-9 secretion and invasion; (e) lipid raft–disrupting agents inhibited raft-associated CXCL12/CXCR4 transactivation of the HER2 and cellular invasion; (f) overexpression of CXCR4 in prostate cancer cells leads to increased HER2 phosphorylation and migratory properties of prostate cancer cells; and (g) CXCR4 overexpression enhances bone tumor growth and osteolysis. These data suggest that lipid rafts on the cell membrane are the key site for CXCL12/CXCR4–induced HER2 receptor transactivation. This transactivation contributes to enhanced invasive signals and metastatic growth in the bone microenvironment. (Mol Cancer Res 2008;6(3):446–57)