Growth factor-mediated signal transduction cascades can be regulated spatio-temporally by signaling modulators, such as Sprouty proteins. The four mammalian Sprouty family members are palmitoylated phosphoproteins that can attenuate or potentiate numerous growth factor-induced signaling pathways. Previously, we have shown that Sprouty-1 and Sprouty-2 associate with Caveolin-1, the major structural protein of caveolae. Like Sprouty, Caveolin-1 inhibits growth factor-induced mitogen-activated protein kinase activation. Here, we demonstrate that all four mammalian Sprouty family members physically interact with Caveolin-1. The C terminus of Caveolin-1 is the major Sprouty-binding site, whereas Sprouty binds Caveolin-1 via its conserved C-terminal domain. A single point mutation in this domain results in loss of Caveolin-1 interaction. Moreover, we demonstrate that the various Sprouty isoforms differ dramatically in their cooperation with Caveolin-1-mediated inhibition of mitogen-activated protein kinase activation and that such cooperation is also highly dependent on the type of growth factor investigated and on cell density. Together, the data suggest that the Sprouty/Caveolin-1 interaction modulates signaling in a growth factor- and Sprouty isoform-specific manner.