Although plasma membrane domains such as caveolae provide an organizing principle for signaling pathways and cholesterol homeostasis in the cell, relatively little is known regarding specific mechanisms whereby intracellular lipid binding proteins are targeted to caveolae. Therefore, the interaction between caveolin-1 and sterol carrier protein-2 (SCP-2), a protein that binds and transfers both cholesterol and signaling lipids (e.g. phosphatidylinositides, sphingolipids), was examined by yeast two-hybrid, in vitro binding, and fluorescence resonance energy transfer analyses (FRET). Results of the in vivo and in vitro assays identified for the first time the N-terminal aa1-32 amphipathic α-helix of SCP-2 functionally interacted with caveolin-1. This interaction was independent of the classic caveolin-1 scaffolding domain in which many signaling proteins interact. Instead, SCP-2 bound caveolin-1 through a new domain identified in the N-terminal domain of caveolin-1 between amino acids 32-55. Modeling studies suggested that electrostatic interactions between the SCP-2 N-terminal aa1-32 amphipathic α-helical domain (cationic, positively charged face) and the caveolin-1 N-terminal aa33-59 α-helix (anionic, negatively charged face) may significantly contribute to this interaction. These findings provide new insights on how SCP-2 enhances cholesterol retention within the cell as well as regulates the distribution of signaling lipids such as phosphoinositides and sphingolipids at plasma membrane caveolae.Keywords sterol carrier protein-2; caveolae; caveolin-1; caveolae; cholesterol; signaling Increasing evidence indicates that cholesterol found at the cell surface plasma membrane (PM) is not randomly distributed, but instead organized into both transbilayer (1,2) and lateral (3,4) cholesterol-rich (and/or sphingolipid-rich) domains that adopt a unique, liquidordered structural organization (4-7). It has been postulated that this self-assembling property of cholesterol (and also sphingolipids) into domains in turn forms the structural basis for selective membrane protein organization (8). Support for this hypothesis is from numerous studies demonstrating that many PM proteins are functionally organized into lipid rafts and/or caveolae, a sub-fraction of lipid rafts that have proven to be a remarkably stable † Acknowledgments: This work was supported in part by the USPHS National Institutes of Health GM31651 (FS and AK) and GM62326 (JMB).