Hematopoietic stem cells (HSCs) reside in the bone marrow (BM) niche in a noncycling state and enter the cell cycle at long intervals. However, little is known about inter- and intracellular signaling mechanisms underlying this unique property of HSCs. Here, we show that lipid raft clustering is a key event in the regulation of HSC dormancy. Freshly isolated HSCs from the BM niche lack lipid raft clustering, exhibit repression of the AKT-FOXO signaling pathway, and express abundant p57(Kip2) cyclin-dependent kinase inhibitor. Lipid raft clustering induced by cytokines is essential for HSC re-entry into the cell cycle. Conversely, inhibition of lipid raft clustering caused sustained nuclear accumulation of FOXO transcription factors and induced HSC hibernation ex vivo. These data establish a critical role for lipid rafts in regulating the cell cycle, the survival, and the entry into apoptosis of HSCs and uncover a striking similarity in HSC hibernation and Caenorhabditis elegans dauer formation.