The lipid raft concept introduces into membrane organization the capability of dynamic sub-compartmentalization. Rafts form dynamic platforms with a key role in regulating membrane functions. Our present concept of lipid rafts is that they are dynamic assemblies of sphingolipids, cholesterol and proteins that dissociate and associate on a rapid timescale. These assemblies can be induced to coalesce to form raft clusters and these are the platforms that function in membrane trafficking, cell polarization and signaling. The Simons lab has been focused on how lipid segregation and formation of raft microdomains in cell membranes influences essential cell biological processes in health and disease. We have used an interdisciplinary combination of biochemical, cell biological and biophysical approaches to characterize and explain the shaping of dynamic raft domains in cell membranes. A major advance from our recent research has been the demonstration of microscopic phase separation in a cell membrane. In plasma membrane spheres produced by hypotonic swelling we can induce large domains enriched in the gangliosides GM1 by pentavalent cholera toxin-crosslinking at 37°C. This domain formation is cholesterol-dependent and the GM1 phase is enriched in raft proteins and excludes non-raft proteins. These findings highlight the inherent tendency of the plasma membrane to phase separate while stressing that in living cells this capacity is strictly controlled. The other breakthrough is that we have succeeded in immunoisolating the vesicles that transport a raft marker protein from the trans Golgi network to the plasma membrane. Mass spectrometric analysis demonstrated that these carrier vesicles have a composition dramatically enriched in sphingolipids and ergosterol and decreased in phosphatidylcholine as expected for a vesicular carrier formed by a raft clustering process.. Now there is no doubt anymore that rafts indeed exist in living cells. The stage is now set to for exploring how this subcompartmentalization principle works generally in cell membranes.