Caveolin-1 (Cav1), a scaffold protein of membrane caveolae and coactivator of peroxisome proliferator-activated receptor gamma (PPARg), inhibits oncogenic signaling through Ras and wingless. However, the in vivo role of Cav1 in colorectal cancer (CRC) remained unknown. To test whether loss of Cav1 accelerates tumorigenesis, we generated a novel mouse model of CRC by crossing C57BL/6 Apc(min/+) with B6129 Cav1 knockout (Cav1-/-) mice. Apc(min/+) Cav1-/- mice developed large, microinvasive and vascularized intraepithelial adenocarcinomas in the distal colon and rectum with higher incidence than Apc(min/+) Cav1+/- and Apc(min/+) Cav1+/+ littermates. Intratumoral gene signatures related to Ras and wingless signaling were elevated, nuclear localization of PPARg protein and expression of PPARg-target genes were reduced independently of Cav1. The PPARg-agonist rosiglitazone prevented tumor formation in mice irrespectively of the Cav1 status and upregulated expression of the Ras-inhibitory protein docking protein-1. Thus, codeficiency of Cav1 and adenomatous polyposis coli facilitated formation of CRC, and activation of PPARg may offer novel strategies for treatment of CRC.