Rab5 is a small GTPase that regulates early endosome trafficking and other cellular processes, including cell adhesion and migration. Specifically, Rab5 promotes Rac1 activation and cancer cell migration, but little is known about the upstream regulators of Rab5. We have previously shown that the scaffolding protein Caveolin-1 (CAV1) promotes Rac1 activation and migration of cancer cells. Here, we hypothesized that CAV1 stimulates Rab5 activation, leading to increased Rac1 activity and cell migration. Expression of CAV1 in B16-F10 mouse melanoma and HT-29(US) human colon adenocarcinoma cells increased the GTP loading of Rab5, whereas shRNA-mediated targeting of endogenous CAV1 in MDA-MB-231 breast cancer cells decreased Rab5-GTP levels. Accordingly, shRNA-mediated downregulation of Rab5 decreased CAV1-mediated Rac1 activation, cell migration and invasion in B16-F10 and HT-29(US) cells. Expression of CAV1 was accompanied by increased recruitment of Tiam1, a Rac1 guanine nucleotide exchange factor (GEF), to Rab5-positive early endosomes. Using the inhibitor NSC23766, Tiam1 was shown to be required for Rac1 activation and cell migration induced by CAV1 and Rab5. Mechanistically, we provide evidence implicating p85a (also known as PIK3R1), a Rab5 GTPase-activating protein (GAP), in CAV1-dependent effects, by showing that CAV1 recruits p85a, precluding p85a-mediated Rab5 inactivation and increasing cell migration. In summary, these studies identify a novel CAV1-Rab5-Rac1 signaling axis, whereby CAV1 prevents Rab5 inactivation, leading to increased Rac1 activity and enhanced tumor cell migration and invasion.