Caveolin-1 (Cav1) is an essential component of caveolae whose Src kinase-dependent phosphorylation on tyrosine 14 (Y14) is associated with regulation of focal adhesion dynamics. However, the relationship between these disparate functions remains to be elucidated. Caveola biogenesis requires expression of both Cav1 and cavin-1, but Cav1Y14 phosphorylation is dispensable. In this paper, we show that Cav1 tyrosine phosphorylation induces caveola biogenesis via actin-dependent mechanotransduction and inactivation of the Egr1 (early growth response-1) transcription factor, relieving inhibition of endogenous Cav1 and cavin-1 genes. Cav1 phosphorylation reduces Egr1 binding to Cav1 and cavin-1 promoters and stimulates their activity. In MDA-231 breast carcinoma cells that express elevated levels of Cav1 and caveolae, Egr1 regulated Cav1, and cavin-1 promoter activity was dependent on actin, Cav1, Src, and Rho-associated kinase as well as downstream protein kinase C (PKC) signaling. pCav1 is therefore a mechanotransducer that acts via PKC to relieve Egr1 transcriptional inhibition of Cav1 and cavin-1, defining a novel feedback regulatory loop to regulate caveola biogenesis.