Iota toxin produced by Clostridium perfringens is a binary, actin ADP-ribosylating toxin that is organized into the enzymatically active component Ia and the binding component Ib. Lipolysis-stimulated lipoprotein receptor (LSR) has been identified as a cellular receptor of Ib. Here, we investigated the functional interaction between Ib and LSR, where siRNA for LSR blocked the toxin-mediated cytotoxicity and the binding of Ib. The addition of Ib to LSR-green fluorescence protein (GFP)-transfected cells at 4 °C resulted in colocalization with LSR and Ib on the cell surface. Upon transfer of the cells from 4 °C to 37 °C, LSR and Ib were internalized and observed in cytoplasmic vesicles. When the cells were incubated with Ib at 37 °C and fractionated using the Triton-insoluble membrane, Ib oligomer was localized in insoluble factions that fulfilled the criteria of lipid rafts, and LSR was clustered in lipid rafts. To examine the interaction between N-terminal extracellular region of LSR and Ib, we constructed a series of LSR N-terminal deletions. Ten amino acids residues can be deleted from this end without any reduction of Ib binding. However, deletion of 15 N-terminal residues drastically reduces its ability to bind Ib. These results demonstrate that Ib binds to the LSR N-terminal 10 to 15 residues and endocytoses into trafficking endosomes together with LSR.