Glucocorticoids play a major role in the development of muscle atrophy in various medical conditions, such as cancer, burn injury, and sepsis, by inhibiting insulin signaling. In this study, we report a new pathway in which glucocorticoids reduce the levels of upstream insulin signaling components by downregulating the transcription of the gene encoding caveolin-1 (CAV1), a scaffolding protein present in the caveolar membrane. Treatment with the glucocorticoid dexamethasone (DEX) decreased CAV1 protein and Cav1 mRNA expression, with a concomitant reduction in insulin receptor alpha (IRa) and IR substrate 1 (IRS1) levels in C2C12 myotubes. On the basis of the results of promoter analysis using deletion mutants and site-directed mutagenesis a negative glucocorticoid-response element in the regulatory region of the Cav1 gene was identified, confirming that Cav1 is a glucocorticoid-target gene. Cav1 knockdown using siRNA decreased the protein levels of IRa and IRS1, and overexpression of Cav1 prevented the DEX-induced decrease in IRa and IRS1 proteins, demonstrating a causal role of Cav1 in the inhibition of insulin signaling. Moreover, injection of adenovirus expressing Cav1 into the gastrocnemius muscle of mice prevented DEX-induced atrophy. These results indicate that CAV1 is a critical regulator of muscle homeostasis, linking glucocorticoid signaling to the insulin signaling pathway, thereby providing a novel target for the prevention of glucocorticoid-induced muscle atrophy.