Src family kinase (SFK) is known to control various cell functions, but the significance of the location of its activation was largely unknown. We herein revealed that SFK activation occurs in lipid rafts. Based on this finding, we have developed a lipid raft-targeted SFK inhibitory fusion protein (LRT-SIFP) that inhibits the SFK activity in lipid rafts. LRT-SIFP has a peptide inhibitor of SFK and a lipid raft-targeting sequence in which two cysteine residues are palmitoylated for clustering in lipid rafts. LRT-SIFP was found to inhibit cell adhesion and cell cycle progression of human breast cancer cell lines MCF-7 and MDA-MB231. On the other hand, the cell functions of MCF-7 cells were found to be not affected with a previously developed peptide inhibitor of SFK that lacks the lipid raft-targeting sequence. In addition, when we replaced the targeting sequence of LRT-SIFP with the consensus sequence for geranylgeranylation to make LRT-SIFP unable to cluster in lipid rafts, this mutated LRT-SIFP did not show any effect on the above cell functions of MCF-7 cells. Furthermore, in contrast to the breast cancer cell lines, LRT-SIFP did not show any inhibitory effect on cell adhesion and cell cycle progression of human normal cell line HEK293. The present lipid raft-specific knockdown of SFK activity would potentially be useful for selective cancer therapy to prevent tumorigenesis and metastasis of breast cancer cells.