Caveolin‐1 is a principal component of caveolae membranes in vivo. Caveolin‐1 mRNA and protein expression are lost or reduced during cell transformation by activated oncogenes. Interestingly, the human caveolin‐1 gene is localized to a suspected tumor suppressor locus (7q31. 1). However, it remains unknown whether downregulation of caveolin‐1 is sufficient to mediate cell transformation or tumorigenicity. Here, we employ an antisense approach to derive stable NIH 3T3 cell lines that express dramatically reduced levels of caveolin‐1 but contain normal amounts of caveolin‐2. NIH 3T3 cells harboring antisense caveolin‐1 exhibit anchorage‐independent growth, form tumors in immunodeficient mice and show hyperactivation of the p42/44 MAP kinase cascade. Importantly, transformation induced by caveolin‐1 downregulation is reversed when caveolin‐1 protein levels are restored to normal by loss of the caveolin‐1 antisense vector. In addition, we show that in normal NIH 3T3 cells, caveolin‐1 expression levels are tightly regulated by specific growth factor stimuli and cell density. Our results suggest that upregulation of caveolin‐1 may be important in mediating contact inhibition and negatively regulating the activation state of the p42/44 MAP kinase cascade.