Tissue factor pathway inhibitor (TFPI) blocks tissue factor-factor VIIa (TF-FVIIa) activation of factors X and IX through the formation of the TF-FVIIa-FXa-TFPI complex. Most TFPI in vivo associates with caveolae in endothelial cells (EC). The mechanism of this association and the anticoagulant role of caveolar TFPI are not yet known. Here we show that expression of caveolin-1 (Cav-1) in 293 cells keeps TFPI exposed on the plasmalemma surface, decreases the membrane lateral mobility of TFPI, and increases the TFPI-dependent inhibition of TF-FVIIa. Caveolae-associated TFPI supports the co-localization of the quaternary complex with caveolae. To investigate the significance of these observations for EC we used RNA interference to deplete the cells of Cav-1. Functional assays and fluorescence microscopy revealed that the inhibitory properties of TFPI were diminished in EC lacking Cav-1, apparently through deficient assembly of the quaternary complex. These findings demonstrate that caveolae regulate the inhibition by cell-bound TFPI of the active protease production by the extrinsic pathway of coagulation.