Caveolin plays an essential role in the formation of characteristic surface pits, caveolae, which cover the surface of many animal cells. The fundamental principles of caveola formation are only slowly emerging. Here we show that caveolin expression in a prokaryotic host lacking any intracellular membrane system drives the formation of cytoplasmic vesicles containing polymeric caveolin. Vesicle formation is induced by expression of wild-type caveolins, but not caveolin mutants defective in caveola formation in mammalian systems. In addition, cryoelectron tomography shows that the induced membrane domains are equivalent in size and caveolin density to native caveolae and reveals a possible polyhedral arrangement of caveolin oligomers. The caveolin-induced vesicles or heterologous caveolae (h-caveolae) form by budding in from the cytoplasmic membrane, generating a membrane domain with distinct lipid composition. Periplasmic solutes are encapsulated in the budding h-caveola, and purified h-caveolae can be tailored to be targeted to specific cells of interest.