Caveolin is the major protein component required for the formation of caveolae on the plasma membrane. Here we show that trafficking of Caenorhabditis elegans caveolin-1 (CAV-1) is dynamically regulated during development of the germ line and embryo. In oocytes a CAV-1-green fluorescent protein (GFP) fusion protein is found on the plasma membrane and in large vesicles (CAV-1 bodies). After ovulation and fertilization the CAV-1 bodies fuse with the plasma membrane in a manner reminiscent of cortical granule exocytosis as described in other species. Fusion of CAV-1 bodies with the plasma membrane appears to be regulated by the advancing cell cycle, and not fertilization per se, because fusion can proceed in spe-9 fertilization mutants but is blocked by RNA interference-mediated knockdown of an anaphase-promoting complex component (EMB-27). After exocytosis, most CAV-1-GFP is rapidly endocytosed and degraded within one cell cycle. CAV-1 bodies in oocytes appear to be produced by the Golgi apparatus in an ARF-1-dependent, clathrin-independent, mechanism. Conversely endocytosis and degradation of CAV-1-GFP in embryos requires clathrin, dynamin, and RAB-5. Our results demonstrate that the distribution of CAV-1 is highly dynamic during development and provides new insights into the sorting mechanisms that regulate CAV-1 localization.