Caveolae are small, plasma membrane invaginations that have been implicated in cell signaling. In A431 cells, approximately half of the total cellular phosphatidylinositol 4,5-bisphosphate (PtdIns 4, 5-P2) was found to be localized in low density, Triton-insoluble membrane domains enriched in caveolin. Treatment of cells with either epidermal growth factor or bradykinin for 5 min at 37 degrees C resulted in approximately a 50% decrease in this caveolar PtdIns 4,5-P2 with no change in the levels of plasma membrane PtdIns 4,5-P2. These data suggest that the PtdIns 4,5-P2 present in cells is largely compartmentalized and that the caveolar PtdIns 4,5-P2 is subject to hydrolysis by hormone-stimulated phospholipase C. As growth factor receptors, seven transmembrane domain receptors, heterotrimeric G proteins, and the inositol trisphosphate receptor have all been shown to be enriched in caveolae, these findings suggest that both the generation and response to inositol trisphosphate is highly compartmentalized within the cell.