Hereditary nephrotic syndrome is a heterogeneous disease, characterized by heavy proteinuria and renal failure. Mutations of NPHS1 or NPHS2, the genes encoding for nephrin and podocin, lead to early onset of heavy proteinuria, and rapid progression to end-stage renal disease, suggesting that both proteins are essential for the integrity of the glomerular filter. Podocin is a stomatin protein family member with a predicted hairpin-like structure localizing to the insertion site of the slit diaphragm of podocytes, the visceral glomerular epithelial cells of the kidney. Here we investigate the pathomechanisms of different disease-causing podocin mutations. We show that wild-type podocin is targeted to the plasma membrane, and forms homo-oligomers involving the carboxy and amino terminal cytoplasmic domains. The association of podocin with specialized lipid raft microdomains of the plasma membrane was a prerequisite for recruitment of nephrin into rafts. In contrast, disease-causing mutations of podocin (R138Q and R138X) failed to recruit nephrin into rafts either because these mutants were retained in the endoplasmic reticulum (R138Q), or because they failed to associate with rafts (R138X) despite their presence in the plasma membrane. None of the mutants did augment nephrin signaling, suggesting that lipid raft targeting facilitates nephrin signaling. Our findings demonstrate that the failure of mutant podocin to recruit nephrin into lipid rafts may be essential for the pathogenesis of NPHS2.