The extraordinary sensitivity of CD8+ T cells to recognize antigen impinges to a large extent on the coreceptor CD8. While several studies have shown that the CD8beta chain endows CD8 with efficient coreceptor function, the molecular basis for this is enigmatic. Here we report that cell-associated CD8alphabeta, but not CD8alphaalpha or soluble CD8alphabeta, substantially increases the avidity of T cell receptor (TCR)-ligand binding. To elucidate how the cytoplasmic and transmembrane portions of CD8beta endow CD8 with efficient coreceptor function, we examined T1.4 T cell hybridomas transfected with various CD8beta constructs. T1.4 hybridomas recognize a photoreactive Plasmodium berghei circumsporozoite (PbCS) peptide derivative (PbCS (4-azidobezoic acid [ABA])) in the context of H-2K(d), and permit assessment of TCR-ligand binding by TCR photoaffinity labeling. We find that the cytoplasmic portion of CD8beta, mainly due to its palmitoylation, mediates partitioning of CD8 in lipid rafts, where it efficiently associates with p56(lck). In addition, the cytoplasmic portion of CD8beta mediates constitutive association of CD8 with TCR/CD3. The resulting TCR-CD8 adducts exhibit high affinity for major histocompatibility complex (MHC)-peptide. Importantly, because CD8alphabeta partitions in rafts, its interaction with TCR/CD3 promotes raft association of TCR/CD3. Engagement of these TCR/CD3-CD8/lck adducts by multimeric MHC-peptide induces activation of p56(lck) in rafts, which in turn phosphorylates CD3 and initiates T cell activation.