Extracellular signals received by membrane receptors are processed, encoded and transferred to the nucleus via phosphorylation and spatial relocation of protein members of multiple component pathways, such as mitogen activated protein kinase (MAPK) cascades. The receptor-induced membrane recruitment of the cytoplasmic protein SOS results in the activation of the Ras/MAPK cascade. It has been suggested that the membrane recruitment of signaling proteins causes an increase in the diffusion-limited rates. We have recently shown that this increase is too small to be responsible for enhanced signal transduction. Instead we demonstrate that the function of membrane localization is to increase the number (or average lifetime) of complexes between signaling partners. A hallmark of signaling pathways is the spatial separation of activation and deactivation mechanisms; e.g. a protein can be phosphorylated at the cell surface by a membrane-bound kinase and dephosphorylated in the cytosol by a cytosolic phosphatase. Given the measured values of protein diffusion coefficients and of phosphatase and kinase activities, the spatial separation is shown to result in precipitous phospho-protein gradients. When information transfer is hampered by slow protein diffusion and rapid dephosphorylation, phospho-protein trafficking within endocytic vesicles may be an efficient way to deliver messages to physiologically relevant locations. The proposed mechanism explains recent observations that various inhibitors of endocytosis can inhibit MAPK activation. Additional mechanisms facilitating the relay of signals from cell-surface receptors to the nucleus can involve the assembly of protein kinases on a scaffolding protein and active transport of signaling complexes by molecular motors. We also discuss long-range signaling within a cell, such as survival signaling in neurons. We hypothesize that ligand-independent waves of receptor activation or/and traveling waves of phosphorylated kinases emerge to spread the signals over long distances.