The membrane association of endothelial nitric oxide synthase (eNOS) plays an important role in the biosynthesis of nitric oxide (NO) in vascular endothelium. Previously, we have shown that in cultured endothelial cells and in intact blood vessels, eNOS is found primarily in the perinuclear region of the cells and in discrete regions of the plasma membrane, suggesting trafficking of the protein from the Golgi to specialized plasma membrane structures. Here, we show that eNOS is found in Triton X-100-insoluble membranes prepared from cultured bovine aortic endothelial cells and colocalizes with caveolin, a coat protein of caveolae, in cultured bovine lung microvascular endothelial cells as determined by confocal microscopy. To examine if eNOS is indeed in caveolae, we purified luminal endothelial cell plasma membranes and their caveolae directly from intact, perfused rat lungs. eNOS is found in the luminal plasma membranes and is markedly enriched in the purified caveolae. Because palmitoylation of eNOS does not significantly influence its membrane association, we next examined whether this modification can affect eNOS targeting to caveolae. Wild-type eNOS, but not the palmitoylation mutant form of the enzyme, colocalizes with caveolin on the cell surface in transfected NIH 3T3 cells, demonstrating that palmitoylation of eNOS is necessary for its targeting into caveolae. These data suggest that the subcellular targeting of eNOS to caveolae can restrict NO signaling to specific targets within a limited microenvironment at the cell surface and may influence signal transduction through caveolae.