Caveolin, a 21-24-kDa integral membrane protein, is a principal component of caveolae membranes. We have suggested that caveolin functions as a scaffolding protein to organize and concentrate certain caveolin-interacting proteins within caveolae membranes. In this regard, caveolin co-purifies with a variety of lipid-modified signaling molecules, including G-proteins, Src-like kinases, Ha-Ras, and eNOS. Using several independent approaches, it has been shown that a 20-amino acid membrane proximal region of the cytosolic amino-terminal domain of caveolin is sufficient to mediate these interactions. For example, this domain interacts with G-protein alpha subunits and Src-like kinases and can functionally suppress their activity. This caveolinderived protein domain has been termed the caveolin-scaffolding domain. However, it remains unknown how the caveolin-scaffolding domain recognizes these molecules. Here, we have used the caveolin-scaffolding domain as a receptor to select random peptide ligands from phage display libraries. These caveolin-selected peptide ligands are rich in aromatic amino acids and have a characteristic spacing in many cases. A known caveolin-interacting protein, Gi2alpha, was used as a ligand to further investigate the nature of this interaction. Gi2alpha and other G-protein alpha subunits contain a single region that generally resembles the sequences derived from phage display. We show that this short peptide sequence derived from Gi2alpha interacts directly with the caveolin-scaffolding domain and competitively inhibits the interaction of the caveolin-scaffolding domain with the appropriate region of Gi2alpha. This interaction is strictly dependent on the presence of aromatic residues within the peptide ligand, as replacement of these residues with alanine or glycine prevents their interaction with the caveolin-scaffolding domain. In addition, we have used this interaction to define which residues within the caveolin-scaffolding domain are critical for recognizing these peptide and protein ligands. Also, we find that the scaffolding domains of caveolins 1 and 3 both recognize the same peptide ligands, whereas the corresponding domain within caveolin-2 fails to recognize these ligands under the same conditions. These results serve to further demonstrate the specificity of this interaction. The implications of our current findings are discussed regarding other caveolin- and caveolae-associated proteins.