Endothelial nitric oxide synthase (eNOS) activity is tightly regulated by posttranscriptional modification and its subcellular localization. Here we examined whether insulin modulates nitric oxide (NO) production by regulating eNOS subcellular localization. We used confocal microscopy and immunoblots to examine the time course for 1) subcellular targeting/association of eNOS and caveolin-1 (CAV-1); 2) eNOS Ser(1179) phosphorylation; and 3) NO production in cultured bovine aorta endothelial cells. Serum starvation increased eNOS/CAV-1 localization to the perinuclear region. Adding insulin provoked their prompt translocation to and association at the plasma membrane (PM). Specific monoclonal antibodies against either CAV-1 or eNOS coimmunoprecipitated the other from bovine aorta endothelial cell membrane extracts, and insulin increased this interaction. Insulin stimulated NO production transiently despite a persistent eNOS Ser(1179) phosphorylation. The decline of NO production correlated temporally to insulin-induced translocation of eNOS and CAV-1 to PM. Knockdown of CAV-1 expression with a specific small interfering RNA duplex resulted in eNOS redistributing to the perinuclear region and nearly doubled insulin-induced NO production. Inhibition of phosphatidylinositol 3-kinase activity with wortmannin not only significantly inhibited insulin-induced translocation of eNOS and CAV-1 to PM but also blocked insulin-induced interaction of CAV-1 with eNOS at PM. Insulin increased incorporation of [(3)H]palmitic acid into eNOS immunoprecipitates by approximately 140%. Insulin-induced translocation of eNOS and CAV-1 to PM was palmitoylation dependent. Inhibiting eNOS and CAV-1 palmitoylation enhanced the NO production while blocking the translocation of eNOS and CAV-1 to PM induced by insulin. These data show that insulin acutely regulates eNOS and CAV-1 trafficking to PM of vascular endothelial cells where their interaction can regulate eNOS activity.