Membrane association is believed to be a prerequisite for the biological activity of the HIV-1 pathogenicity factor Nef. Attachment to cellular membranes as well as incorporation into detergent-insoluble microdomains (lipid rafts) require the N-terminal myristoylation of Nef. However, this modification is not sufficient for sustained membrane association and a specific raft-targeting signal for Nef has not yet been identified. Using live cell confocal microscopy and membrane fractionation analyses, we found that the N-terminal anchor domain (aa 1-61) is necessary and sufficient for efficient membrane binding of Nef from HIV-1(SF2). Within this domain, highly conserved lysine and arginine residues significantly contributed to Nef's membrane association and localization. Plasma membrane localization of Nef was also governed by an additional membrane-targeting motif between residues 40 and 61. Importantly, two lysines at positions 4 and 7 were not essential for the overall membrane association but critically contributed to Nef's incorporation into lipid raft domains. Cell surface receptor downmodulation was largely unaffected by mutations of all N-terminal basic residues, while the association of Nef with Pak2 kinase activity and its ability to augment virion infectivity correlated with its lysine-mediated raft incorporation. In contrast, all basic residues were required for efficient HIV-1 replication in primary human T lymphocytes but did not contribute to the incorporation of Nef into HIV-1 virions. Together, these results unravel that Nef's membrane association is governed by a complex pattern of signature motifs that differentially contribute to individual Nef activities. The identification of a critical raft targeting determinant and the functional characterization of a membrane-bound, non-raft-associated Nef variant indicate raft incorporation as a regulatory mechanism that determines the biological activity of distinct subpopulations of Nef in HIV-infected cells.