Caveolae are abundant cell-surface pits that have been implicated in lipid regulation, signal transduction, and endocytosis. Caveolins, the major membrane proteins of caveolae, play a crucial role in the formation of caveolae. Mutations in caveolins are associated with breast cancer and with a number of muscle diseases, including limb girdle muscular dystrophy. We have studied how caveolin-lipid interactions generate the unique architecture of the caveolar domain by studying caveola formation in a model prokaryotic system. Vesicle formation is induced by expression of wild-type caveolins, but not caveolin mutants defective in caveola formation in mammalian systems. In addition, cryo-electron tomography shows that the induced membrane domains are equivalent in size and caveolin density to native caveolae and reveals a possible polyhedral arrangement of caveolin oligomers. The caveolin-induced vesicles form by budding in from the cytoplasmic membrane, generating a membrane domain with distinct lipid composition. We propose a model in which caveolin oligomers expand the cytoplasmic leaflet and generate membrane curvature. Our recent studies have identified a new family of coat proteins, termed cavins, that regulate caveola formation in vertebrate cells. Study of the cavins and their dynamics of caveola association/dissociation provides new insights into the role of caveolae in mechanosensation.