Caveolin-1 is a principal component of caveolae membranes in vivo. Caveolin-1 mRNA and protein expression are lost or reduced during cell transformation by activated oncogenes. Interestingly, the human caveolin-1 gene is localized to a suspected tumor suppressor locus (7q31.1). However, it remains unknown whether downregulation of caveolin-1 is sufficient to mediate cell transformation or tumorigenicity. Here, we employ an antisense approach to derive stable NIH 3T3 cell lines that express dramatically reduced levels of caveolin-1 but contain normal amounts of caveolin-2. NIH 3T3 cells harboring antisense caveolin-1 exhibit anchorage-independent growth, form tumors in immunodeficient mice and show hyperactivation of the p42/44 MAP kinase cascade. Importantly, transformation induced by caveolin-1 downregulation is reversed when caveolin-1 protein levels are restored to normal by loss of the caveolin-1 antisense vector. In addition, we show that in normal NIH 3T3 cells, caveolin-1 expression levels are tightly regulated by specific growth factor stimuli and cell density. Our results suggest that upregulation of caveolin-1 may be important in mediating contact inhibition and negatively regulating the activation state of the p42/44 MAP kinase cascade.