Glomerular sclerosis of diverse etiologies is characterized by mesangial matrix accumulation, with transforming growth factor-β (TGFβ) an important pathogenic factor. The GTPase RhoA mediates TGFβ-induced matrix accumulation in some settings. Here we study the role of the membrane microdomain caveolae in TGFβ-induced RhoA activation and fibronectin upregulation in mesangial cells (MC). In primary rat MC, TGFβ1 time dependently increased RhoA and downstream Rho kinase activation. Rho pathway inhibition blocked TGFβ1-induced upregulation of fibronectin transcript and protein. TGFβ1-induced RhoA activation was prevented by disrupting caveolae with cholesterol depletion and rescued by cholesterol repletion. Compared with wild types, RhoA/Rho kinase activation was absent in MC lacking caveolae. Reexpression of caveolin-1 (and caveolae) restored these responses. Phosphorylation of caveolin-1 on Y14, effected by Src kinases, has been implicated in signaling responses. Overexpression of nonphosphorylatable caveolin-1 Y14A prevented TGFβ1-induced RhoA activation. TGFβ1 also activated Src, and its inhibition blocked RhoA activation. Furthermore, TGFβ1 led to association of RhoA and caveolin-1. This was prevented by Src or TGFβ receptor I inhibition, and by caveolin-1 Y14A overexpression. Last, fibronectin upregulation by TGFβ1 was blocked by Src inhibition, not seen in caveolin-1 knockout MC, and restored by caveolin-1 reexpression in the latter. TGFβ1-induced collagen I accumulation also required caveolae. TGFβ1-mediated Smad2/3 activation, however, did not require caveolae. We conclude that RhoA/Rho kinase mediates TGFβ-induced fibronectin upregulation. This requires caveolae and caveolin-1 interaction with RhoA. Interference with caveolin/caveolae or RhoA signaling thus represents a potential target for the treatment of fibrotic renal disease.