ABSTRACT: In this study, we assessed the contributions of plasma membrane (PM) microdomain targeting to the functions of H-Ras and R-Ras. These paralogs have identical effector-binding regions, but variant C-terminal targeting domains (tDs) which are responsible for lateral microdomain distribution: activated H-Ras targets to lipid ordered/disordered (Lo/Ld) domain borders, and R-Ras to Lo domains (rafts). We hypothesized that PM distribution regulates Ras-effector interactions and downstream signaling. We used tD swap mutants, and assessed effects on signal transduction, cell proliferation, transformation and tumorigenesis. R-Ras harboring the H-Ras tD (R-Ras-tH) interacted with Raf, and induced Raf and ERK phosphorylation similar to H-Ras. R-Ras-tH stimulated proliferation and transformation in vitro, and these effects were blocked by both MEK and PI3K inhibition. Conversely, the R-Ras tD suppressed H-Ras-mediated Raf activation and ERK phosphorylation, proliferation and transformation. Thus, Ras access to Raf at the PM is sufficient for MAPK activation and is a principal component of Ras mitogenesis and transformation. Fusion of the R-Ras extended N-terminal domain to H-Ras had no effect on proliferation, but inhibited transformation and tumor progression, indicating that the R-Ras N-terminus also contributes negative regulation to these Ras functions. PI3K activation was tD independent; however, H-Ras was a stronger activator of PI3K than R-Ras, with either tD. PI3K inhibition nearly ablated transformation by R-Ras-tH, H-Ras and H-Ras-tR, whereas MEK inhibition had a modest effect on Ras-tH-driven transformation but no effect on H-Ras-tR transformation. R-Ras-tH supported tumor initiation, but not tumor progression. While H-Ras-tR-induced transformation was reduced relative to H-Ras, tumor progression was robust and similar to H-Ras. H-Ras tumor growth was moderately suppressed by MEK inhibition, which had no effect on H-Ras-tR tumor growth. In contrast, PI3K inhibition markedly suppressed tumor growth by H-Ras and H-Ras-tR, indicating that sustained PI3K signaling is a critical pathway for H-Ras-driven tumor progression, independent of microdomains.