Cathepsin B protein and activity are known to localize to the basal plasma membrane of colon carcinoma cells following the appearance of K-ras mutations. Using immunofluorescence and subcellular fractionation techniques and two human colon carcinoma cell lines - one with a mutated K-ras allele (HCT 116) and a daughter line in which the mutated allele has been disrupted (HKh-2)-we demonstrate that the localization of cathepsin B to caveolae on the surface of these carcinoma cells is regulated by mutant K-ras. In HCT 116 cells, a greater percentage of cathepsin B was distributed to the caveolae, and the secretion of cathepsin B and pericellular (membrane-associated and secreted) cathepsin B activity were greater than observed in HKh-2 cells. Previous studies established the light chain of annexin II tetramer, p11, as a binding site for cathepsin B on the surface of tumor cells. The deletion of active K-ras in HKh-2 cells reduced the steady-state levels of p11 and caveolin-1 and the distribution of p11 to caveolae. Based upon these results, we speculate that cathepsin B, a protease implicated in tumor progression, plays a functional role in initiating proteolytic cascades in caveolae as downstream components of this cascade (e.g., urokinase plasminogen activator and urokinase plasminogen activator receptor) are also present in HCT 116 caveolae.