The p42/44 mitogen-activated protein (MAP)-kinase cascade is a well-established signal transduction pathway that is initiated at the cell surface and terminates within the nucleus. More specifically, receptor tyrosine kinases can indirectly activate Raf, which in turn leads to activation of MEK and ERK and ultimately phosphorylation of Elk, a nuclear transcription factor. Recent reports have suggested that some members of p42/44 MAP kinase cascade can be sequestered within plasmalemmal caveolae in vivo. For example, morphological studies have directly shown that ERK-1/2 is concentrated in plasma membrane caveolae in vivo using immunoelectron microscopy. In addition, constitutive activation of the p42/44 MAP kinase cascade is sufficient to reversibly down-regulate caveolin-1 mRNA and protein expression. However, the functional relationship between the p42/44 MAP kinase cascade and caveolins remains unknown. Here, we examine the in vivo role of caveolins in regulating signaling along the MAP kinase cascade. We find that co-expression with caveolin 1 dramatically inhibits signaling from EGF-R, Raf, MEK-1 and ERK-2 to the nucleus. Using a variety of caveolin-1 deletion mutants, we mapped this in vivo inhibitory activity to caveolin-1 residues 32-95. Peptides derived from this region of caveolin 1 also inhibit the in vitro kinase activity of purified MEK-1 and ERK-2. Thus, we show here that caveolin-1 expression can inhibit signal transduction from the p42/44 MAP kinase cascade both in vitro and in vivo. Taken together with previous data, our results also suggest that a novel form of reciprocal negative regulation exists between p42/44 MAP kinase activation and caveolin-1 protein expression, i.e. up-regulation of caveolin-1 protein expression down-modulates p42/44 MAP kinase activity (this report) and up-regulation of p42/44 MAP kinase activity down-regulates caveolin-1 mRNA and protein expression.