Integrin-mediated adhesion regulates trafficking of cholesterol-enriched membrane microdomains (CEMM). Upon cell detachment from the extracellular matrix (ECM), CEMMs undergo rapid internalization and are cleared from the plasma membrane. This pathway regulates integrin-mediated Rac membrane targeting, allowing coupling of Rac to downstream effectors. Internalization of CEMMs is mediated by Dynamin-2, a regulator of caveolae dynamics, and caveolin-1, an essential caveolae coat protein. Translocation of tyrosine phosphorylated caveolin-1 from focal adhesions to caveolae upon cell detachment induces CEMM internalization. Notably, integrin-mediated regulation of Erk, phosphatidylinositol-3-OH kinase (PI3K) and Rac pathways is dependent on caveolin-1. These results describe a novel pathway in which integrins prevent downregulation of Erk, PI3K and Rac-dependent pathways by inhibiting caveolin-1-dependent endocytosis. This pathway define a novel molecular mechanism for regulated cell growth and tumor suppression by caveolin-1.