Caveolin-1 is a key regulator of pulmonary endothelial barrier function. Here, we tested the hypothesis that caveolin-1 expression is required for ventilator-induced lung injury (VILI). Caveolin-1 gene-disrupted (Cav-1−/−) and age-, sex-, and strain-matched wild-type (WT) control mice were ventilated using two protocols: volume-controlled with protective (8 mL/kg) versus injurious (21 mL/Kg) tidal volume for up to 6 hours; and pressure-controlled with protective (airway pressure = 12 cm H2O) versus injurious (30 cm H2O) ventilation to induce lung injury. Lung microvascular permeability (whole-lung 125I-albumin accumulation, lung capillary filtration coefficient [Kf, c]) and inflammatory markers (bronchoalveolar lavage [BAL] cytokine levels and neutrophil counts) were measured. We also evaluated histologic sections from lungs, and the time course of Src kinase activation and caveolin-1 phosphorylation. VILI induced a 1.7-fold increase in lung 125I-albumin accumulation, fourfold increase in Kf, c’ significantly increased levels of cytokines CXCL1 and interleukin-6, and promoted BAL neutrophilia in WT mice. Lung injury by these criteria was significantly reduced in Cav-1−/− mice but fully restored by i.v. injection of liposome/Cav-1 cDNA complexes that rescued expression of Cav-1 in lung microvessels. As thrombin is known to play a significant role in mediating stretch-induced vascular injury, we observed in cultured mouse lung microvascular endothelial cells (MLECs) thrombin-induced albumin hyperpermeability and phosphorylation of p44/42 MAP kinase in WT but not in Cav-1−/−MLECs. Thus, caveolin-1 expression is required for mechanical stretch-induced lung inflammation and endothelial hyperpermeability in vitro and in vivo.