During vascular injury, the proliferation and migration of smooth muscle cells leads to characteristic neointima formation, which can be exacerbated by genetic depletion of caveolin-1 or heme oxygenase 1 (HO-1), and inhibited by carbon monoxide (CO), a by-product of heme oxygenase 1 activity. CO inhibited smooth muscle cell proliferation by activating p38 mitogen-activated protein kinase (MAPK) and p21(Waf1/Cip1). Exposure to CO increased caveolin-1 expression in neointimal lesions of injured aorta and in vitro by activating guanylyl cyclase and p38 MAPK. p38beta-/- fibroblasts did not induce caveolin-1 in response to CO, and exhibited a diminished basal caveolin-1 expression, which was restored by p38beta gene transfer. p38beta MAPK down-regulated extracellular signal-regulated protein kinase 1/2 (ERK-1/2), which can repress caveolin-1 transcription. Genetic depletion of caveolin-1 abolished the antiproliferative effect of CO. Thus, we demonstrate that CO, by activating p38beta MAPK, up-regulates caveolin-1, which acts as a tumor suppressor protein that mediates the growth inhibitory properties of this gas.