CD98, an early marker of T-cell activation, is an important regulator of integrin-mediated adhesion events. Previous studies suggest that CD98 is coupled to both cellular activation and transformation and is involved in the pathogenesis of viral infection, inflammatory disease, and cancer. Understanding of the molecular mechanisms underlying CD98 activity may have far-reaching practical applications in the development of novel therapeutic strategies in these disease states. Using small cell lung cancer cell lines, which are nonadherent, nonpolarized, and highly express CD98, we show that, in vitro, under physiological conditions, CD98 is constitutively associated with β1 integrins regardless of activation status. Cross-linking CD98 with the monoclonal antibody 4F2 stimulated phosphatidylinositol (PI) 3-kinase, PI(3,4,5)P3, and protein kinase B in the absence of integrin ligation or extracellular matrix engagement. Furthermore, cross-linking CD98 promoted anchorage-independent growth. Using fibroblasts derived from β1 integrin null stem cells (GD25), wild-type GD25β1, or GD25 cells expressing a mutation preventing β1 integrin-dependent FAK phosphorylation, we demonstrate that a functional β1 integrin is required for CD98 signaling. We propose that by cross-linking CD98, it acts as a “molecular facilitator” in the plasma membrane, clustering β1 integrins to form high-density complexes. This results in integrin activation, integrin-like signaling, and anchorage-independent growth. Activation of PI 3-kinase may, in part, explain cellular transformation seen on overexpressing CD98. These results may provide a paradigm for events involved in such diverse processes as inflammation and viral-induced cell fusion.