In this study, we investigated the functional role of the localization of human OTR in caveolin-1 enriched membrane domains. Biochemical fractionation of MDCK cells stably expressing the WT OTR-GFP indicated that only minor quantities of receptor are partitioned in caveolin-1 enriched domains. However, when fused to caveolin-2, the OTR protein proved to be exclusively localized in caveolin-1 enriched fractions, where it bound the agonist with increased affinity and efficiently coupled to Galpha(q/11). Interestingly, the chimeric protein was unable to undergo agonist-induced internalization and remained confined to the plasma membrane even after prolonged agonist exposure (120 min). A striking difference in receptor stimulation was observed when the OT-induced effect on cell proliferation was analysed: stimulation of the human WT OTR inhibited cell growth, whereas the chimeric protein had a proliferative effect. These data indicate that the localization of human OTR in caveolin-1 enriched microdomains radically alters its regulatory effects on cell growth; the fraction of OTR residing in caveolar structures may therefore play a crucial role in regulating cell proliferation.