Caveolin-1 is the principal structural protein of caveolae membranes in fibroblasts and endothelia. Recently, we have shown that the human CAV-1 gene is localized to a suspected tumor suppressor locus, and mutations in Cav-1 have been implicated in human cancer. Here, we created a caveolin-1 null (CAV-1 -/-) mouse model, using standard homologous recombination techniques, to assess the role of caveolin-1 in caveolae biogenesis, endocytosis, cell proliferation, and endothelial nitric-oxide synthase (eNOS) signaling. Surprisingly, Cav-1 null mice are viable. We show that these mice lack caveolin-1 protein expression and plasmalemmal caveolae. In addition, analysis of cultured fibroblasts from Cav-1 null embryos reveals the following: (i) a loss of caveolin-2 protein expression; (ii) defects in the endocytosis of a known caveolar ligand, i.e. fluorescein isothiocyanate-albumin; and (iii) a hyperproliferative phenotype. Importantly, these phenotypic changes are reversed by recombinant expression of the caveolin-1 cDNA. Furthermore, examination of the lung parenchyma (an endothelial-rich tissue) shows hypercellularity with thickened alveolar septa and an increase in the number of vascular endothelial growth factor receptor (Flk-1)-positive endothelial cells. As predicted, endothelial cells from Cav-1 null mice lack caveolae membranes. Finally, we examined eNOS signaling by measuring the physiological response of aortic rings to various stimuli. Our results indicate that eNOS activity is up-regulated in Cav-1 null animals, and this activity can be blunted by using a specific NOS inhibitor, nitro-l-arginine methyl ester. These findings are in accordance with previous in vitro studies showing that caveolin-1 is an endogenous inhibitor of eNOS. Thus, caveolin-1 expression is required to stabilize the caveolin-2 protein product, to mediate the caveolar endocytosis of specific ligands, to negatively regulate the proliferation of certain cell types, and to provide tonic inhibition of eNOS activity in endothelial cells.