Caveolin is a 22-kDa membrane protein found associated with a coat material decorating the inner membrane surface of caveolae. A remarkable feature of this protein is its ability to migrate from caveolae directly to the endoplasmic reticulum (ER) when membrane cholesterol is oxidized. We now present evidence caveolin is involved in transporting newly synthesized cholesterol from the ER directly to caveolae. MA104 cells and normal human fibroblasts transported new cholesterol to caveolae with a half-time of approximately 10 min. The cholesterol then rapidly flowed from caveolae to non-caveolae membrane. Cholesterol moved out of caveolae even when the supply of fresh cholesterol from the ER was interrupted. Treatment of cells with 10 microg/ml progesterone blocked cholesterol movement from ER to caveolae. Simultaneously, caveolin accumulated in the lumen of the ER, suggesting cholesterol transport is linked to caveolin movement. Caveolae fractions from cells expressing caveolin were enriched in cholesterol 3-4-fold, while the same fractions from cells lacking caveolin were not enriched. Cholesterol transport to the cell surface was nearly 4 times more rapid in cells expressing caveolin than in matched cells lacking caveolin.