Caveolae are free cholesterol (FC)- and sphingolipid-rich surface microdomains abundant in most peripheral cells. Caveolin, a FC binding protein, is a major structural element of these domains. Caveolae serve as portals to regulate cellular FC homeostasis, possibly via their association with ancillary proteins including scavenger receptor B1. The FC content of caveolae regulates the transmission of both extracellular receptor-mediated and endogenous signal transduction via changes in the composition of caveolin-associated complexes of signaling intermediates. By controlling surface FC content, reporting membrane changes by signal transduction to the nucleus, and regulating signal traffic in response to extracellular stimuli, caveolae exert a multifaceted influence on cell physiology including growth and cell division, adhesion, and hormonal response. Cell surface lipid ‘rafts’ may assume many of the functions of caveolae in cells with low levels of caveolin.