NMDA (N-methyl-D-aspartate) receptors are selectively localized at the postsynaptic membrane of excitatory synapses in the mammalian brain. The molecular mechanisms underlying this localization were investigated by expressing the NR1 subunit of the NMDA receptor in fibroblasts. NR1 splice variants containing the first COOH-terminal exon cassette (NR1A and NR1D) were located in discrete, receptor-rich domains associated with the plasma membrane. NR1 splice variants lacking this exon cassette (NR1C and NR1E) were distributed throughout the cell, with large amounts of NR1 protein present in the cell interior. Insertion of this exon cassette into the COOH-terminus of the GluR1 AMPA (alpha-amino-3-hydroxy-5-methyl-4-isoxazole propionate) receptor was sufficient to cause GluR1 to be localized to discrete, receptor-rich domains. Furthermore, protein kinase C phosphorylation of specific serines within this exon disrupted the receptor-rich domains. These results demonstrate that amino acid sequences contained within the NR1 molecule serve to localize this receptor subunit to discrete membrane domains in a manner that is regulated by alternative splicing and protein phosphorylation.