Objective— Monocyte to macrophage differentiation is an essential step in atherogenesis. The structure protein of caveolae, caveolin-1, is increased in primary monocytes after its adhesion to endothelium. We explore the hypothesis that caveolin-1 plays a role in monocyte differentiation to macrophages. Methods and Results— Both phorbol myristate acetate–induced THP-1 and colony-stimulating factor–induced primary monocyte differentiation was associated with an increase in cellular caveolin-1 expression. Overexpression of caveolin-1 by transfection increased macrophage surface markers and inflammatory genes, whereas caveolin-1 knockdown by small interfering RNA or knockout reduced these. Also, caveolin-1 knockdown inhibited the differentiation–induced nuclear translocation of early growth response 1 (EGR-1) through extracellular signal-regulated kinase phosphorylation, further decreased the binding of EGR-1 to CD115 promoter, thus decreasing EGR-1 transcriptional activity. In functional assays, caveolin-1 inhibited transmigration but promoted phagocytosis in the monocyte–macrophage lineage. Decreasing caveolin-1 inhibited the uptake of modified low-density lipoprotein and reduced cellular lipid content. Finally, we showed that caveolin-1 knockout mice displayed less monocyte differentiation than wild-type mice and that EGR-1 transcription activity was also decreased in these mice because of the inhibition of extracellular signal-regulated kinase phosphorylation. Conclusion— Caveolin-1 promotes monocyte to macrophage differentiation through the regulation of EGR-1 transcriptional activity, suggesting that phagocytic caveolin-1 may be critical for atherogenesis.