Caveolin-1 was first identified as a phosphoprotein in Rous sarcoma virus (RSV)-transformed chicken embryo fibroblasts. Tyrosine 14 is now thought to be the principal site for recognition by c-Src kinase; however, little is known about this phosphorylation event. Here, we generated a monoclonal antibody (mAb) probe that recognizes only tyrosine 14-phosphorylated caveolin-1. Using this approach, we show that caveolin-1 (Y14) is a specific tyrosine kinase substrate that is constitutively phosphorylated in Src- and Abl-transformed cells and transiently phosphorylated in a regulated fashion during growth factor signaling. We also provide evidence that tyrosine-phosphorylated caveolin-1 is localized at the major sites of tyrosine-kinase signaling, i.e. focal adhesions. By analogy with other signaling events, we hypothesized that caveolin-1 could serve as a docking site for pTyr-binding molecules. In support of this hypothesis, we show that phosphorylation of caveolin-1 on tyrosine 14 confers binding to Grb7 (an SH2-domain containing protein) both in vitro and in vivo. Furthermore, we demonstrate that binding of Grb7 to tyrosine 14-phosphorylated caveolin-1 functionally augments anchorage-independent growth and epidermal growth factor (EGF)-stimulated cell migration. We discuss the possible implications of our findings in the context of signal transduction.