Numerous components of the cAMP-based signaling cascade, namely G-proteins and G- protein coupled receptors, adenylyl cyclase, and protein kinase A (PKA) have been localized to caveolae and shown to be regulated by the caveolar marker proteins, the caveolins. In order to gain mechanistic insights into these processes in vivo, we have assessed the functional interaction of caveolin-1 (Cav-1) with PKA using mutational analysis. As two regions of Cav-1 had previously been implicated in PKA signaling in vitro, we constructed Cav-1 molecules with mutations/deletions in one or both of these domains. Examination of these mutants shows that Cav-1 requires the presence of either the scaffolding domain or the COOH-terminal domain (but not both) to functionally interact with and inhibit PKA. Interestingly, in contrast to the wild-type protein, these Cav-1 mutants are not localized to caveolae microdomains. However, upon coexpression with wild-type Cav-1, a substantial amount of the mutants was recruited to the caveolae membrane fraction. Using the Cav-1 double mutant with both disrupted scaffolding and COOH-terminal domains, we show that wild-type Cav-1's inhibition of PKA signaling can be partially abrogated in a dose-responsive manner; i.e., the mutant acts in a dominant-negative fashion. Thus, this dominant-negative caveolin-1 mutant will be extremely valuable for assessing the functional role of endogenous caveolin-1 in regulating a variety of other signaling cascades.