Epidermal growth factor receptor (EGFR) amplification and type III mutation (EGFRvIII), associated with constitutive tyrosine kinase activation and high malignancy, are commonly observed in glioblastoma tumors. The association of EGFR and EGFRvIII with caveolins was investigated in human glioblastoma cell lines, U87MG and U87MG-EGFRvIII. Caveolin-1 expression, determined by RT-PCR, real-time quantitative PCR and Western blot, was upregulated in glioblastoma cell lines (two-fold) and tumors (20-300-fold) compared to primary human astrocytes and nonmalignant brain tissue, respectively. U87MG-EGFRvIII expressed higher levels of caveolin-1 than U87MG. In contrast, the expression of caveolin-2 and -3 were downregulated in glioblastoma cells compared to astrocytes. A colocalization of EGFR, but not of EGFRvIII, with lipid rafts and caveolin-1 was observed by immunocytochemistry. Association of EGFR and EGFRvIII with caveolae, assessed in vitro by binding to caveolin scaffolding domain peptides and in vivo by immunocolocalization studies in cells and caveolae-enriched cellular fraction, was phosphorylation-dependent: ligand-induced phosphorylation of EGFR resulted in dissociation of EGFR from caveolae. In contrast, inhibition of the EGFRvIII constitutive tyrosine phosphorylation by AG1478 increased association of EGFRvIII with caveolin-1. AG1478 also increased caveolin-1 expression and reduced glioblastoma cell growth in a semi-solid agar. The evidence suggests that the phosphorylation-regulated sequestration of EGFR in caveolae may be involved in arresting constitutive or ligand-induced signaling through EGFR responsible for glial cell transformation.