The primary function of the mammalian lung is to facilitate diffusion of oxygen to venous blood and to ventilate carbon dioxide produced by catabolic reactions within cells. However, it is also responsible for a variety of other important functions, including host defense and production of vasoactive agents to regulate not only systemic blood pressure, but also water, electrolyte and acid-base balance. Caveolin-1 is highly expressed in the majority of cell types in the lung, including epithelial, endothelial, smooth muscle, connective tissue cells, and alveolar macrophages. Deletion of caveolin-1 in these cells results in major functional aberrations, suggesting that caveolin-1 may be crucial to lung homeostasis and development. Furthermore, generation of mutant mice that under-express caveolin-1 results in severe functional distortion with phenotypes covering practically the entire spectrum of known lung diseases, including pulmonary hypertension, fibrosis, increased endothelial permeability, and immune defects. In this Chapter, we outline the current state of knowledge regarding caveolin-1-dependent regulation of pulmonary cell functions and discuss recent research findings on the role of caveolin-1 in various pulmonary disease states, including obstructive and fibrotic pulmonary vascular and inflammatory diseases.