Caveolin-1 (Cav1) is a scaffold protein and pathogen receptor in the mucosa of the gastrointestinal tract. Chronic infection of gastric epithelial cells by Helicobacter pylori (H. pylori) is a major risk factor for human gastric cancer (GC) where Cav1 is frequently down-regulated. However, the function of Cav1 in H. pylori infection and pathogenesis of GC remained unknown. We show here that Cav1-deficient mice, infected for 11 months with the CagA-delivery deficient H. pylori strain SS1, developed more severe gastritis and tissue damage, including loss of parietal cells and foveolar hyperplasia, and displayed lower colonisation of the gastric mucosa than wild-type B6129 littermates. Cav1-null mice showed enhanced infiltration of macrophages and B-cells and secretion of chemokines (RANTES) but had reduced levels of CD25+ regulatory T-cells. Cav1-deficient human GC cells (AGS), infected with the CagA-delivery proficient H. pylori strain G27, were more sensitive to CagA-related cytoskeletal stress morphologies ("humming bird") compared to AGS cells stably transfected with Cav1 (AGS/Cav1). Infection of AGS/Cav1 cells triggered the recruitment of p120 RhoGTPase-activating protein/deleted in liver cancer-1 (p120RhoGAP/DLC1) to Cav1 and counteracted CagA-induced cytoskeletal rearrangements. In human GC cell lines (MKN45, N87) and mouse stomach tissue, H. pylori down-regulated endogenous expression of Cav1 independently of CagA. Mechanistically, H. pylori activated sterol-responsive element-binding protein-1 (SREBP1) to repress transcription of the human Cav1 gene from sterol-responsive elements (SREs) in the proximal Cav1 promoter. These data suggested a protective role of Cav1 against H. pylori-induced inflammation and tissue damage. We propose that H. pylori exploits down-regulation of Cav1 to subvert the host's immune response and to promote signalling of its virulence factors in host cells.