Abstract-Arterial ATP-sensitive K ϩ (K ATP ) channels are critical regulators of vascular tone, forming a focal point for signaling by many vasoactive transmitters that alter smooth muscle contractility and so blood flow. Clinically, these channels form the target of antianginal and antihypertensive drugs, and their genetic disruption leads to hypertension and sudden cardiac death through coronary vasospasm. However, whereas the biochemical basis of K ATP channel modulation is well-studied, little is known about the structural or spatial organization of the signaling pathways that converge on these channels. In this study, we use discontinuous sucrose density gradients and Western blot analysis to show that K ATP channels localize with an upstream signaling partner, adenylyl cyclase, to smooth muscle membrane fractions containing caveolin, a protein found exclusively in cholesterol and sphingolipid-enriched membrane invaginations known as caveolae. Furthermore, we show that an antibody against the K ATP pore-forming subunit, Kir6.1 co-immunoprecipitates caveolin from arterial homogenates, suggesting that Kir6.1 and caveolin exist together in a complex. To assess whether the colocalization of K ATP channels and adenylyl cyclase to smooth muscle caveolae has functional significance, we disrupt caveolae with the cholesterol-depleting agent, methyl--cyclodextrin. This reduces the cAMP-dependent protein kinase A-sensitive component of whole-cell K ATP current, indicating that the integrity of caveolae is important for adenylyl cyclase-mediated channel modulation. These results suggest that to be susceptible to protein kinase A-dependent activation, arterial K ATP channels need to be localized in the same lipid compartment as adenylyl cyclase; the results also provide the first indication of the spatial organization of signaling pathways that regulate K ATP channel activity.