Vascular ATP-sensitive K(+) (K(ATP)) channels are critical regulators of arterial tone and, thus, blood flow in response to local metabolic needs. They are important targets for clinically used drugs to treat hypertensive emergency and angina. It is known that protein kinase C (PKC) activation inhibits K(ATP) channels in vascular smooth muscles. However, the mechanism by which PKC inhibits the channel remains unknown. Here we report that caveolin-dependent internalization is involved in PKC-epsilon-mediated inhibition of vascular K(ATP) channels (Kir6.1 and SUR2B) by phorbol 12-myristate 13-acetate or angiotensin II in human embryonic kidney 293 cells and human dermal vascular smooth muscle cells. We showed that Kir6.1 substantially overlapped with caveolin-1 at the cell surface. Cholesterol depletion with methyl-beta-cyclodextrin significantly reduced, whereas overexpression of caveolin-1 largely enhanced, PKC-induced inhibition of Kir6.1/SUR2B currents. Importantly, we demonstrated that activation of PKC-epsilon caused internalization of K(ATP) channels, the effect that was blocked by depletion of cholesterol with methyl-beta-cyclodextrin, expression of dominant-negative dynamin mutant K44E, or knockdown of caveolin-1 with small interfering RNA. Moreover, patch-clamp studies revealed that PKC-epsilon-mediated inhibition of the K(ATP) current induced by PMA or angiotensin II was reduced by a dynamin mutant, as well as small interfering RNA targeting caveolin-1. The reduction in the number of plasma membrane K(ATP) channels by PKC activation was further confirmed by cell surface biotinylation. These studies identify a novel mechanism by which the levels of vascular K(ATP) channels could be rapidly downregulated by internalization. This finding provides a novel mechanistic insight into how K(ATP) channels are regulated in vascular smooth muscle cells.