In the lung, caveolin-1 is expressed in both type I alveolar epithelial and endothelial cells where it is hypothesized to modulate molecular signaling activities and progression of tumorigenesis. Developmentally, caveolin-1alpha is expressed in fetal lung endothelial, but not epithelial, cells; in adult lung, both cell types express caveolin-1alpha. To test the hypothesis that caveolin-1 transcription is differentially regulated in type I and endothelial cells, we characterized the proximal promoter of the mouse caveolin-1 gene in lung cell lines to identify factors that control its cell-specific expression. We show that caveolin-1 expression is regulated by an Ets cis-element in a lung epithelial cell line, but not a lung endothelial cell line, and that three ETS family members, ETS-1, PEA3, and ERM, recognize and bind the Ets site in the epithelial cell line. Based on these findings, we have identified the Ets cis-element as a region that accounts for differential transcriptional regulation of caveolin-1 in lung epithelial and endothelial cells.