The relationship between glycosylphosphatidyl inositol (GPI)-linked proteins and caveolins remains controversial. Here, we derived fibroblasts from Cav-1 null mouse embryos to study the behavior of GPI-linked proteins in the absence of caveolins. These cells lack morphological caveolae, do not express caveolin-1, and show a ∼95% down-regulation in caveolin-2 expression; these cells also do not express caveolin-3, a muscle-specific caveolin family member. As such, these caveolin-deficient cells represent an ideal tool to study the role of caveolins in GPI-linked protein sorting. We show that in Cav-1 null cells GPI-linked proteins are preferentially retained in an intracellular compartment that we identify as the Golgi complex. This intracellular pool of GPI-linked proteins is not degraded and remains associated with intracellular lipid rafts as judged by its Triton insolubility. In contrast, GPI-linked proteins are transported to the plasma membrane in wild-type cells, as expected. Furthermore, recombinant expression of caveolin-1 or caveolin-3, but not caveolin-2, in Cav-1 null cells complements this phenotype and restores the cell surface expression of GPI-linked proteins. This is perhaps surprising, as GPI-linked proteins are confined to the exoplasmic leaflet of the membrane, while caveolins are cytoplasmically oriented membrane proteins. As caveolin-1 normally undergoes palmitoylation on three cysteine residues (133, 143, and 156), we speculated that palmitoylation might mechanistically couple caveolin-1 to GPI-linked proteins. In support of this hypothesis, we show that palmitoylation of caveolin-1 on residues 143 and 156, but not residue 133, is required to restore cell surface expression of GPI-linked proteins in this complementation assay. We also show that another lipid raft-associated protein, c-Src, is retained intracellularly in Cav-1 null cells. Thus, Golgi-associated caveolins and caveola-like vesicles could represent part of the transport machinery that is necessary for efficiently moving lipid rafts and their associated proteins from the trans-Golgi to the plasma membrane. In further support of these findings, GPI-linked proteins were also retained intracellularly in tissue samples derived from Cav-1 null mice (i.e., lung endothelial and renal epithelial cells) and Cav-3 null mice (skeletal muscle fibers).