Caveolin proteins are structural components of caveolae and are involved in the regulation of many biological processes. Recent studies have shown that caveolin-1 modulates inflammatory responses and is important for sepsis development. In the present study, we show that caveolin-1 and caveolin-2 have opposite roles in lipopolysaccharide (LPS)-induced sepsis using caveolin-deficient (Cav-1 (-/-) and Cav-2 (-/-) ) mice for each of these proteins. While Cav-1 (-/-) mice displayed delayed mortality following challenge with LPS, Cav-2 (-/-) mice were more sensitive to LPS compared to wild-type (WT). With Cav-2 (-/-) mice, this effect was associated with increased intestinal injury and increased intestinal permeability. This negative outcome was also correlated with enhanced expression of iNOS in epithelial intestinal cells, and enhanced production of nitric oxide (NO). By contrast, Cav-1 (-/-) mice demonstrated a decrease in iNOS expression with decreased NO production, but no alteration in intestinal permeability. The differential expression of iNOS was associated with a significant increase of STAT-1 activation in these mice. Intestinal cells of Cav-2 (-/-) mice showed increased phosphorylation of STAT-1 at tyrosine 701 compared to wild-type. However, Cav-1 (-/-) mice-derived intestinal cells showed decreased levels of phosphorylation of STAT-1 at tyrosine 701. Since caveolin-2 is almost completely absent in Cav-1 (-/-) mice, we conclude that it is not just the absence of caveolin-2 that is responsible for the observed effects, but that the balance between caveolin-1 and caveolin-2 is important for iNOS expression and ultimately for sepsis outcome.