Here, we investigate the involvement of caveolins in the pathophysiology of Alzheimer's disease (AD). We show dramatic upregulation of caveolin-3 immunoreactivity in astroglial cells surrounding senile plaques in brain tissue sections from authentic AD patients and an established transgenic mouse model of AD. In addition, we find that caveolin-3 physically interacts and biochemically colocalizes with amyloid precursor protein (APP) both in vivo and in vitro. Interestingly, recombinant overexpression of caveolin-3 in cultured cells stimulated beta-secretase-mediated processing of APP. Immunoreactivities of APP and presenilins were concomitantly increased in caveolin-3-positive astrocytes. Because the presenilins also form a physical complex with caveolin-3, caveolin-3 may provide a common platform for APP and the presenilins to associate in astrocytes. In AD, augmented expression of caveolin-3 and presenilins in reactive astrocytes may alter APP processing, leading to the overproduction of its toxic amyloid metabolites.