Previously, we showed caveolae contain a population of protein kinase Calpha (PKCalpha) that appears to regulate membrane invagination. We now report that multiple PKC isoenzymes are enriched in caveolae of unstimulated fibroblasts. To understand the mechanism of PKC targeting, we prepared caveolae lacking PKCalpha and measured the interaction of recombinant PKCalpha with these membranes. PKCalpha bound with high affinity and specificity to caveolae membranes. Binding was calcium dependent, did not require the addition of factors that activate the enzyme, and involved the regulatory domain of the molecule. A 68-kD PKCalpha-binding protein identified as sdr (serum deprivation response) was isolated by interaction cloning and localized to caveolae. Antibodies against sdr inhibited PKCalpha binding. A 100-amino acid sequence from the middle of sdr competitively blocked PKCalpha binding while flanking sequences were inactive. Caveolae appear to be a membrane site where PKC enzymes are organized to carry out essential regulatory functions as well as to modulate signal transduction at the cell surface.