Rod and cone photoreceptor cyclic nucleotide-gated (CNG) channels play pivotal roles in phototransduction. This work investigates the functional significance of photoreceptor CNG channel association with membrane microdomains enriched in raft lipids, cholesterol and sphingolipids. The primary subunits of cone and rod CNG channels, CNGA3 and CNGA1, respectively, were heterologously expressed in HEK 293 cells, and channel activity was determined by ratiometric measurement of [Ca (2+)] i in response to cyclic guanosine monophosphate (cGMP) stimulation. CNGA3 was found to be largely insoluble following Triton X-100 extraction and cofractionationed with biochemically isolated membrane domains enriched in caveolin-1. Cofractionation of both natively expressed CNGA3 and CNGB1 (the modulatory subunit of the rod CNG channel) with the low buoyant density, caveolin-1-enriched membranes was also confirmed in mouse retinas. The functional significance of this association was established by the observed negative effects of depletion of raft lipids on the channel activity. Treatment with the cholesterol depleting agent, methyl-beta-cyclodextrin (MCD), significantly inhibited CNGA3 and CNGA1 activation in response to cGMP stimulation. MCD treatment lowered cellular cholesterol levels by approximately 45% without altering fatty acid composition, suggesting that the inhibition of channel activity by MCD treatment is not due to perturbation of other membrane lipids. Treatment with the sphingolipid biosynthesis inhibitor myriocin resulted in impaired activation and cytosolic redistribution of CNGA3, suggesting that the integrity of the membrane domains is critical for the channel cellular processing and plasma membrane localization. This study demonstrates the association of photoreceptor CNG channels with membrane domains enriched in raft lipids and indicates, for the first time, that raft lipids modulate the plasma membrane localization and functional activity of photoreceptor CNG channels.