Regulatory volume decrease (RVD) is a protective mechanism that allows mammalian cells to restore their volume when exposed to a hypotonic environment. A key component of RVD is the release of K(+), Cl(-), and organic osmolytes, such as taurine, which then drives osmotic water efflux. Previous experiments have indicated that caveolin-1, a coat protein of caveolae microdomains in the plasma membrane, promotes the swelling-induced Cl(-) current (I(Cl,swell)) through volume-regulated anion channels. However, it is not known whether the stimulation by caveolin-1 is restricted to the release of Cl(-) or whether it also affects the swelling-induced release of other components, such as organic osmolytes. To address this problem, we have studied I(Cl,swell) and the hypotonicity-induced release of taurine and ATP in wild-type Caco-2 cells that are caveolin-1 deficient and in stably transfected Caco-2 cells that express caveolin-1. Electrophysiological characterization of wild-type and stably transfected Caco-2 showed that caveolin-1 promoted I(Cl,swell), but not cystic fibrosis transmembrane conductance regulator currents. Furthermore, caveolin-1 expression stimulated the hypotonicity-induced release of taurine and ATP in stably transfected Caco-2 cells grown as a monolayer. Interestingly, the effect of caveolin-1 was polarized because only the release at the basolateral membrane, but not at the apical membrane, was increased. It is therefore concluded that caveolin-1 facilitates the hypotonicity-induced release of Cl(-), taurine, and ATP, and that in polarized epithelial cells, the effect of caveolin-1 is compartmentalized to the basolateral membrane.