The chloroplast signal recognition particle (cpSRP) and its receptor (cpFtsY) function in thylakoid biogenesis to target integral membrane proteins to thylakoids. Unlike cytosolic SRP receptors in eukaryotes, cpFtsY partitions between thylakoid membranes and the soluble stroma. Based on sequence alignments, a membrane-binding motif identified in Escherichia coli FtsY appears to be conserved in cpFtsY, yet whether the proposed motif is responsible for the membrane-binding function of cpFtsY has yet to be shown experimentally. Our studies show that a small N-terminal region in cpFtsY stabilizes a membrane interaction critical to cpFtsY function in cpSRP-dependent protein targeting. This membrane-binding motif is both necessary and sufficient to direct cpFtsY and fused passenger proteins to thylakoids. Our results demonstrate that the cpFtsY membrane-binding motif may be functionally replaced by the corresponding region from E. coli, confirming that the membrane-binding motif is conserved among organellar and prokaryotic homologs. Furthermore, the capacity of cpFtsY for lipid binding correlates with liposome-induced GTP hydrolysis stimulation. Mutations that debilitate the membrane-binding motif in cpFtsY result in higher rates of GTP hydrolysis, suggesting that negative regulation is provided by the intact membrane-binding region in the absence of a bilayer. Furthermore, NMR and CD structural studies of the N-terminal region and the analogous region in the E. coli SRP receptor revealed a conformational change in secondary structure that takes place upon lipid binding. These studies suggest that the cpFtsY membrane-binding motif plays a critical role in the intramolecular communication that regulates cpSRP receptor functions at the membrane.