Membrane peptidases play important roles in cell activation, proliferation and communication. Human fibroblast-like synoviocytes express considerable amounts of aminopeptidase N/CD13, dipeptidyl peptidase IV/CD26, and neprilysin/CD10, transmembrane proteins previously proposed to be involved in the regulation of intra-articular levels of neuropeptides and chemotactic mediators as well as in adhesion and cell-cell interactions. Here, we report these peptidases in synoviocytes to be localized predominantly in glycolipid- and cholesterol-rich membrane microdomains known as 'rafts'. At the ultrastructural level, aminopeptidase N/CD13 and dipeptidyl peptidase IV/CD26 were found in caveolae, in particular in intracellular yet surface-connected vesicle-like structures and 'rosettes' made up of several caveolae. In addition, clusters of peptidases were seen at the cell surface in flat patches ranging in size from about 60 to 160 nm. Cholesterol depletion of synoviocytes by methyl-beta-cyclodextrin disrupted >90% of the caveolae and reduced the raft localization of aminopeptidase N/CD13 without affecting Ala-p-nitroanilide-cleaving activity of confluent cell cultures. In co-culture experiments with T-lymphocytes, cholesterol depletion of synoviocytes greatly reduced their capability to induce an early lymphocytic expression of aminopeptidase N/CD13. We propose caveolae/rafts to be peptidase-rich 'hot-spot' regions of the synoviocyte plasma membrane required for functional cell-cell interactions with lymphocytes. The peptidases may act in concert with other types of proteins such as receptors and signal transducers localized in these specialized membrane domains.