Caveolae are small invaginations of the cell membrane that are thought to play a role in important physiological functions such as cell surface signaling, endocytosis and intracellular cholesterol transport. Caveolin-1 is a key protein in these domains and contributes to the organization of cholesterol and saturated lipids within these vesicular invaginations of the plasma membrane. Caveolae are thought to be involved in the signaling of tyrosine kinase receptors and serine threonine receptors. In this article we focus on the involvement of caveolae in the signal transduction of bone morphogenetic proteins (BMPs). BMPs play important roles during embryonic development and especially in chondrogenesis, osteogenesis, neurogenesis and hematopoiesis. The initiation of the signal tranduction starts by the binding of a BMP to a corresponding set of BMP receptors. Using image cross-correlation spectroscopy, we show that the BMP receptors BRIa and BRII colocalize with caveolin-1 isoforms alpha and beta on the cell surface. BRIa colocalizes predominantly with the caveolin-1 alpha isoform. Coexpression of BRII leads to a redistribution of BRIa into domains enriched in caveolin-1 beta. After stimulation with BMP-2, BRIa moves back into the region with caveolin-1 alpha. BRII is expressed in regions enriched in caveolin-1 alpha and beta. Stimulation of cells with BMP-2 leads to a redistribution of BRII into domains enriched in caveolin-1 alpha. Immunoprecipitation studies using transfected COS-7 cells indicate that BRII binds to caveolin-1 alpha and beta. The binding of BRII to caveolin-1 was verified using A431 cells. Stimulation of starved A431 cells with BMP-2 lead to a release of caveolin-1 from the BMP receptors. We show further that the caveolin-1 beta isoform inhibits BMP signaling whereas the alpha isoform does not.