We have previously demonstrated that hexanoyl-D-erythrosphingosine ( C-6-ceramide), an anti-mitogenic cell-permeable lipid metabolite, limited vascular smooth muscle growth by abrogating trauma-induced Akt activity in a stretch injury model of neointimal hyperplasia. Furthermore, ceramide selectively and directly activated protein kinase C zeta ( PKC zeta) to suppress Akt-dependent mitogenesis. To further analyze the interaction between ceramide and PKC zeta, the ability of ceramide to localize within highly structured lipid microdomains ( rafts) and activate PKC zeta was investigated. Using rat aorta vascular smooth muscle cells ( A7r5), we now demonstrate that C-6-ceramide treatment results in an increased localization and phosphorylation of PKC zeta within caveolin-enriched lipid microdomians to inactivate Akt. In addition, ceramide specifically reduced the association of PKC zeta with 14-3-3, a scaffold protein localized to less structured regions within membranes. Pharmacological disruption of highly structured lipid microdomains resulted in abrogation of ceramide-activated, PKC zeta-dependent Akt inactivation, whereas molecular strategies suggest that ceramide-dependent PKC zeta phosphorylation of Akt3 at Ser(34) was necessary for ceramide-induced vascular smooth muscle cell growth arrest. Taken together, these data demonstrate that structured membrane microdomains are necessary for ceramide-induced activation of PKC zeta and resultant diminished Akt activity, leading to vascular smooth muscle cell growth arrest.