Previously we showed that interleukin 1 beta stimulates the conversion of sphingomyelin to ceramide in the caveolae fraction of normal human fibroblasts. The ceramide, in turn, blocked platelet-derived growth factor (PDGF) stimulated DNA synthesis. We now present evidence that the PDGF receptor initiates signal transduction from caveolae. Cell fractionation and immunocytochemistry show caveolae to be the principal location of PDGF receptors at the cell surface. Multiple caveolae proteins acquire phosphotyrosine when PDGF binds to its receptor, but the hormone appears to have little effect on the tyrosine phosphorylation of non-caveolae membrane proteins. Five proteins known to interact with the phosphorylated receptor were found to be highly enriched in caveolae membrane. PDGF caused the concentration of three of these proteins to significantly increase in the caveolae fraction. Finally, PDGF stimulated the association of a 190-kDa phosphoprotein with the caveolae marker protein, caveolin. Therefore, ceramide may modulate PDGF receptor function directly in caveolae.