Platelet-activating factor (PAF) is a mediator of pulmonary oedema in acute lung injury that increases vascular permeability within minutes, partly through activation of acid sphingomyelinase (ASM). Since caveolae are rich in sphingomyelin and caveolin-1, which block endothelial nitric oxide (NO) synthase (eNOS) by direct binding, we examined the relationship between ASM, caveolin-1 and eNOS activity in the regulation of vascular permeability by PAF.In caveolar fractions from pulmonary vascular endothelial cells (isolated from perfused rat lungs) the abundance of caveolin-1 and eNOS increased rapidly after PAF perfusion. PAF treatment decreased endothelial NO (eNO) formation as assessed by in situ fluorescence microscopy. Restoration of eNO levels with PAPA-NONOate ((Z)-1-[N-(3-ammoniopropyl)-N-(npropyl)amino]diazen-1-ium-1,2-diolate) mitigated the PAF-induced oedema.PAF treatment increased the ASM activity in caveolar fractions and perfusion with ASM decreased eNO production. Pharmacological inhibition of the ASM pathway with imipramine, D609 or dexamethasone blocked the PAF-induced increase of caveolin-1 and eNOS in caveolae, and the decrease in eNO production and oedema formation.We conclude that PAF causes ASM-dependent enrichment of caveolin-1 in caveolae of endothelial cells, leading to decreased eNO production which contributes to pulmonary oedema formation. These findings suggest rapid reduction in eNO production as a novel mechanism in the regulation of vascular permeability.