Tumor necrosis factor receptor–associated factor (TRAF)2 is a critical adaptor molecule for tumor necrosis factor (TNF) receptors in inflammatory and immune signaling. Upon receptor engagement, TRAF2 is recruited to CD40 and translocates to lipid rafts in a RING finger-dependent process, which enables the activation of downstream signaling cascades including c-Jun NH2-terminal kinase (JNK) and nuclear factor (NF)-κB. Although TRAF1 can displace TRAF2 and CD40 from raft fractions, it promotes the ability of TRAF2 activate signaling over a sustained period of time. Removal of the RING finger of TRAF2 prevents its translocation into detergent-insoluble complexes and renders it dominant negative for signaling. TRAF1−/− dendritic cells show attenuated responses to secondary stimulation by TRAF2-dependent factors and increased stimulus-dependent TRAF2 degradation. Replacement of the RING finger of TRAF2 with a raft-targeting signal restores JNK activation and association with the cyto-skeletal protein Filamin, but not NF-κB activation. These findings offer insights into the mechanism of TRAF2 signaling and identify a physiological role for TRAF1 as a regulator of the subcellular localization of TRAF2.