A multiplicity of vital cellular and tissue level functions are controlled by caveolin-1 and it is considered to be an important candidate for targeted therapeutics. Rac1-cortactin signaling plays an important role in maintaining the functions of the endothelial barrier in microvascular endothelial cells. The activity of Rac1 has been shown to be regulated by caveolin-1. Therefore, the present study investigated the consequences of down-regulating caveolin-1 and the subsequent changes in activity of Rac1 and the endothelial barrier functions in primary rat pulmonary microvascular endothelial cells (RPMVECs). RPMVECs were transfected with a small hairpin RNA duplex to down-regulate caveolin-1 expression. This procedure significantly increased the activity of Rac1. Moreover, down-regulation of caveolin-1 attenuated TNF-α-induced decrease in TER, increase in the flux of FITC-BSA and the disappearance of cortactin from the cell periphery in RPMVEC. Rac1 inhibitors significantly abolished this barrier-protective effect induced by down-regulation of caveolin-1 in response to TNF-α in RPMVECs. In conclusion, our data suggest a mechanism for the regulation of Rac1 activity by caveolin-1, with consequences for activation of endothelial cells in response to TNF-α.