Caveolins are essential structural proteins driving the formation of caveolae, specialized invaginations of the plasma membrane. Loss of Caveolin-1 (Cav1) function in mice causes distinct neurological phenotypes leading to impaired motor control, however, the underlying developmental mechanisms are largely unknown. In this study we find that loss-of-function of Xenopus Cav1 results in a striking swimming defect characterized by paralysis of the morphants. High-resolution imaging of muscle cells revealed aberrant sarcomeric structures with disorganized actin fibers. As cav1 is expressed in motor neurons, but not in muscle cells, the muscular abnormalities are likely a consequence of neuronal defects. Indeed, targeting cav1 Morpholino oligonucleotides to neural tissue, but not muscle tissue, disrupts axonal outgrowth of motor neurons and causes swimming defects. Furthermore, inhibition of voltage-gated sodium channels mimicked the Cav1 loss-of-function phenotype. In addition, analyzing axonal morphology we detect that Cav1 loss-of-function causes excessive filopodia and lamellipodia formation. Using rescue experiments, we show that the Cav1 Y14 phosphorylation site is essential and identify a role of RhoA, Rac1, and Cdc42 signaling in this process. Taken together, these results suggest a previously unrecognized function of Cav1 in muscle development by supporting axonal outgrowth of motor neurons.