Caveolae, flask-shaped invaginations of the plasma membrane occupying up to 30% of cell surface in capillaries, represent a predominant location of endothelial nitric oxide synthase (eNOS) in endothelial cells. The caveolar coat protein caveolin forms high-molecular-weight, Triton-insoluble complexes through oligomerization mediated by interactions between NH2-terminal residues 61-101. eNOS is targeted to caveolae by cotranslational N-myristoylation and posttranslational palmitoylation. Caveolin-1 coimmunoprecipitates with eNOS; interaction with eNOS occurs via the caveolin-1 scaffolding domain and appears to result in the inhibition of NOS activity. The inhibitory conformation of eNOS is reversed by the addition of excess Ca2+/calmodulin and by Akt-induced phosphorylation of eNOS. Here, we shall dissect the system using the classic paradigm of a reflex loop: 1) the action of afferent elements, such as fluid shear stress and its putative caveolar sensor, on caveolae; 2) the ways in which afferent signals may affect the central element, the activation of the eNOS-nitric oxide system; and 3) several resultant well-established and novel physiologically important effector mechanisms, i.e., vasorelaxation, angiogenesis, membrane fluidity, endothelial permeability, deterrance of inflammatory cells, and prevention of platelet aggregation.