Caveolae are flask-shaped invaginations of the plasmalemma which pinch off to form discrete vesicles within the cell cytoplasm. Biochemically, caveolae may be distinguished by the presence of a protein, caveolin, that is the principal component of filaments constituting their striated cytoplasmic coat. Squamous alveolar epithelial type I (ATI) cells, comprising approximately 95% of the surface area of lung alveolar epithelium, possess numerous plasmalemmal invaginations and cytoplasmic vesicles ultrastructurally indicative of caveolae. However, an ultrastructural appearance does not universally imply the biochemical presence of caveolin. This immunocytochemical study has utilised a novel application of confocal laser scanning and electron microscopy unequivocally to localise caveolin-1 to ATI cells. Further, cytoplasmic vesicles and flask-shaped membrane invaginations in the ATI cell were morphologically identified whose membranes were decorated with anti-caveolin-1 immunogold label. Coexistent with this, however, in both ATI and capillary endothelial cells could be seen membrane invaginations morphologically characteristic of caveolae, but which lacked associated caveolin immunogold label. This could reflect a true biochemical heterogeneity in populations of morphologically similar plasmalemmal invaginations or an antigen threshold requirement for labelling. The cuboidal alveolar epithelial type II cell (ATII) also displayed specific label for caveolin-1 but with no ultrastructural evidence for the formation of caveolae. The biochemical association of caveolin with ATI cell vesicles has broad implications for the assignment and further study of ATI cell function.