The cytokine tumor necrosis factor-related apoptosis-inducing ligand (TRAIL) and its cell membrane receptors constitute an elaborate signaling system fulfilling important functions in immune regulation and tumor surveillance. Activation of the death receptors TRAILR1 and TRAILR2 can lead to apoptosis, whereas TRAILR3 and TRAILR4 are generally referred to as decoy receptors, which have been shown to inhibit TRAIL-induced apoptosis. The underlying molecular mechanisms, however, remain unclear. Alike other members of the TNF receptor superfamily, TRAIL receptors contain a pre-ligand binding assembly domain (PLAD) mediating receptor oligomerization. Still, the stoichiometry of TRAIL receptor oligomers as well as the issue whether the PLAD mediates only homotypic or also heterotypic interactions, remained inconclusive until now. Performing acceptor-photobleaching FRET studies with TRAIL receptors 1, 2 and 4 we demonstrate interactions in all possible combinations. Formation of dimers is shown by chemical crosslinking experiments for homophilic and heterophilic interactions of these receptors. Implications of the demonstrated receptor-receptor interactions on signaling were investigated next. Both, apoptosis induction and activation of the transcription factor NFκB were significantly reduced in presence of TRAILR4. Our experimental data, highly consistent with results from a mathematical model, show that the inhibitory capacity of TRAILR4 is attributable to signaling-independent mechanisms, strongly suggesting a reduction of signaling-competent death receptors through formation of heteromeric receptor complexes. In summary, we propose a model of TRAIL receptor interference driven by PLAD-mediated formation of receptor heterodimers on the cell membrane.