In the past year, we have witnessed considerable progress towards an understanding of the workings of caveolae. Highlights include the identification of new caveolin family members, the characterization of VIP21-caveolin as a cholesterol-binding oligomeric protein, and evidence for functional interactions between caveolins and heterotrimeric G proteins. In addition, novel systems for caveolae purification and for studying caveolae biogenesis are starting to reveal insights into the molecular basis of caveolae formation and function.