Caveolae are flask-shaped endocytic structures composed primarily of caveolin-1 (Cav1) and caveolin-2 (Cav2) proteins. Interestingly, a cytoplasmic accumulation of Cav1 protein does not always result in a large number of assembled caveolae organelles, suggesting a regulatory mechanism that controls caveolae assembly. In this study we report that stimulation of epithelial cells with epithelial growth factor (EGF) results in a profound increase in the number of caveolar structures at the plasma membrane. Human pancreatic tumor cells (PANC-1) and normal rat kidney cells (NRK), as a control, were treated with 30 ng/ml EGF for 0, 5, and 20 min before fixation and viewing by electron microscopy. Cells fixed without EGF treatment exhibited modest numbers of plasma membrane-associated caveolae. Cells treated with EGF for 5 or 20 min showed an 8-10-fold increase in caveolar structures, some forming long, pronounced caveolar "towers" at the cell-cell borders. It is known that Cav1 is Src-phosphorylated on tyrosine 14 in response to EGF treatment, although the significance of this modification is unknown. We postulated that phosphorylation could provide the stimulus for caveolae assembly. To this end, we transfected cells with mutant forms of Cav1 that could not be phosphorylated (Cav1Y14F) and tested if this altered protein reduced the number of EGF-induced caveolae. We observed that EGF-stimulated PANC-1 cells expressing the mutant Cav1Y14F protein exhibited a 90-95% reduction in caveolae number compared with cells expressing wild type Cav1. This study provides novel insights into how cells regulate caveolae formation and implicates EGF-based signaling cascades in the phosphorylation of Cav1 as a stimulus for caveolae assembly.