Ca2+ influx via store-operated Ca2+ release activated Ca2+ (CRAC) channels represents a main signaling pathway for T-cell activation as well as mast-cell degranulation. The ER-located Ca2+-sensor, STIM1 and the Ca2+-selective ion pore, Orai1 in the membrane are sufficient to fully reconstitute CRAC currents. Their identification, but even more the recent structural resolution of both proteins by X-ray crystallography has substantially advanced the understanding of the activation mechanism of CRAC channels. In this review, we provide a detailed description of the STIM1/Orai1 signaling pathway thereby focusing on the critical domains mediating both, intra- as well as intermolecular interactions and on the ion permeation pathway. Based on the results of functional studies as well as the recently published crystal structures, we portray a mechanistic view of the steps in the CRAC channel signaling cascade ranging from STIM1 oligomerization over STIM1-Orai1 coupling to the ultimate Orai1 channel activation and permeation.