Caveolin-1 is an essential structural constituent of caveolae that has been implicated in mitogenic signaling and oncogenesis. Caveolin-1 is down-regulated in oncogene-transformed and tumor-derived cells. Antisense suppression of caveolin-1 or expression of a dominant negative form are sufficient for inducing cellular transformation. Expression of recombinant caveolin-1 inhibits anchorage-independent growth in cancer cells. The present study was designed to determine whether this is caused by inhibition of cancer cell survival or cell proliferation, and to test if another important property of cancer cells, i.e. matrix invasion, is modulated by expression of caveolin. Utilizing MCF-7 human breast adenocarcinoma cells stably transfected with caveolin-1 (MCF-7/Cav1), we demonstrate that caveolin-1 expression decreases MCF-7 cell proliferation rate and markedly reduces their capacity to form colonies in soft agar. The loss of anchorage-independent growth is not associated with stimulation of anoikis; in fact, MCF-7/Cav1 cells exhibit increased survival after detachment as compared with MCF-7 cells, indicating that in these cells caveolin-1 inhibits anoikis. Analysis of matrix metalloprotease release and matrix invasion revealed that expression of caveolin-1 inhibits also these important metastasis-related phenomena. Plating MCF-7 cells on a laminin matrix resulted in activation of ERK1/2, which was dramatically inhibited in MCF-7/Cav1 cells. We conclude that high expression level of caveolin-1 in human breast cancer cells exerts a negative modulatory effect on anchorage-independent growth by inhibiting cell proliferation even though matrix-independent cell survival is enhanced. Caveolin-1 expression inhibits also matrix invasion and blocks laminin-dependent activation of ERK1/2. The inhibitory effect of caveolin-1 on these transformation-dependent processes supports the hypothesis that caveolin-1 acts as a tumor suppressor protein which may impose major phenotypic changes when expressed in human cancer cells.