The cell plasma membrane (PM) is a highly dynamic and heterogeneous lipid environment, driven by complex hydrophobic and electrostatic interactions among the hundreds of types of lipid species. Although the biophysical processes governing lipid lateral segregation in the cell PM have been established in vitro, biological implications of lipid heterogeneity are poorly understood. Of particular interest is how membrane proteins potentially utilize transient spatial clustering of PM lipids to regulate function. This review focuses on a lipid‐anchored small GTPase K‐Ras as an example to explore how its C‐terminal membrane‐anchoring domain, consisting of a contiguous hexa‐lysine polybasic domain and an adjacent farnesyl anchor, possesses a complex coding mechanism for highly selective lipid sorting on the PM. How this lipid specificity modulates K‐Ras signal transmission will also be discussed.