Caveolae are specialized invaginations of the plasma membrane which have been proposed to play a role in diverse cellular processes such as endocytosis and signal transduction. We have developed an assay to determine the fraction of internal versus plasma membrane caveolae. The GPI-anchored protein, alkaline phosphatase, was clustered in caveolae after antibody-induced crosslinking at low temperature and then, after various treatments, the relative amount of alkaline phosphatase on the cell surface was determined. Using this assay we were able to show a time- and temperature-dependent decrease in cell-surface alkaline phosphatase activity which was dependent on antibody-induced clustering. The decrease in cell surface alkaline phosphatase activity was greatly accelerated by the phosphatase inhibitor, okadaic acid, but not by a protein kinase C activator. Internalization of clustered alkaline phosphatase in the presence or absence of okadaic acid was blocked by cytochalasin D and by the kinase inhibitor staurosporine. Electron microscopy confirmed that okadaic acid induced removal of caveolae from the cell surface. In the presence of hypertonic medium this was followed by the redistribution of groups of caveolae to the center of the cell close to the microtubule-organizing center. This process was reversible, blocked by cytochalasin D, and the centralization of the caveolar clusters was shown to be dependent on an intact microtubule network. Although the exact mechanism of internalization remains unknown, the results show that caveolae are dynamic structures which can be internalized into the cell. This process may be regulated by kinase activity and require an intact actin network.