The mammalian caveolin gene family consists of caveolins-1, -2, and -3. The expression of caveolin-3 is muscle-specific. In contrast, caveolins-1 and -2 are co-expressed, and they form a hetero-oligomeric complex in many cell types, with particularly high levels in adipocytes, endothelial cells, and fibroblasts. These caveolin hetero-oligomers are thought to represent the functional assembly units that drive caveolae formation in vivo. Here, we investigate the mechanism by which caveolins-1 and -2 form hetero-oligomers. We reconstituted this reciprocal interaction in vivo and in vitro using a variety of complementary approaches, including the generation of glutathione S-transferase fusion proteins and synthetic peptides. Taken together, our results indicate that the membrane-spanning domains of both caveolins-1 and -2 play a critical role in mediating their ability to interact with each other. This is the first demonstration that these unusual membrane-spanning regions found in the caveolin family play a specific role in protein-protein interactions.