Caveolin-1 is a scaffolding protein of cholesterol-rich caveolae lipid rafts in the plasma membrane. In addition to regulating cholesterol transport, caveolin-1 has the ability to bind a diverse array of cell signaling molecules and regulate cell signal transduction in caveolae. Currently, there is little known about the role of caveolin-1 in stem cells. It has been reported that the caveolin-1 null mouse has an expanded population of cells expressing stem cell markers in the gut, mammary gland, and brain, suggestive of a role for caveolin-1 in stem cell regulation. The caveolin-1 null mouse also has increased bone mass and an increased bone formation rate, and its bone marrow-derived mesenchymal stem cells (MSCs) have enhanced osteogenic potential. However, the role of caveolin-1 in human MSC osteogenic differentiation remains unexplored. In this study, we have characterized the expression of caveolin-1 in human bone marrow derived MSCs. We show that caveolin-1 protein is enriched in density gradient-fractionated MSC plasma membrane, consisting of ∼100 nm diameter membrane-bound vesicles, and is distributed in a punctate pattern by immunofluoresence localization. Expression of caveolin-1 increases in MSCs induced to undergo osteogenic differentiation, and siRNA-mediated knockdown of caveolin-1 expression enhances MSC proliferation and osteogenic differentiation. Taken together, these findings suggest that caveolin-1 normally acts to regulate the differentiation and renewal of MSCs, and increased caveolin-1 expression during MSC osteogenesis likely acts as a negative feedback to stabilize the cell phenotype. J. Cell. Biochem. 113: 3773–3787, 2012. © 2012 Wiley Periodicals, Inc.