Eph receptor tyrosine kinases are key players during the development of the embryonic vasculature; however, their role and regulation in adult angiogenesis remain to be defined. Caveolae are flask- shaped invaginations of the cell membrane; their major structural protein, caveolin-1, has been shown to regulate signaling molecules localized in these micro- domains. The interaction of caveolin- 1 with several of these proteins is mediated by the binding of its scaffolding domain to a region containing hydrophobic amino acids within these proteins. The presence of such a motif within the EphB1 kinase domain prompted us to investigate the caveolar localization and regulation of EphB1 by caveolin-1. We report that EphB1 receptors are localized in caveolae, and directly interact with caveolin- 1 upon ligand stimulation. This interaction, as well as EphB1-mediated activation of extracellular- signal-regulated kinase (ERK), was abrogated by overexpression of a caveolin- 1 mutant lacking a functional scaffolding domain. Interaction between Ephs and caveolin- 1 is not restricted to the B-subclass of receptors, since we show that EphA2 also interacts with caveolin-1. Furthermore, we demonstrate that the caveolin- binding motif within the kinase domain of EphB1 is primordial for its correct membrane targeting. Taken together, our findings establish caveolin- 1 as an important regulator of downstream signaling and membrane targeting of EphB1.