Caveolae are invaginated membrane structures with high levels of cholesterol, sphingomyelin and caveolin protein that are predicted to exist as liquid-ordered domains with low water permeability. We isolated a caveolae-enriched membrane fraction without detergents from rat lung and characterized their permeability properties to non-electrolytes and protons. Membrane permeability to water was 2.85 ± 0.41 x 10^-3 cm/s, a value 5 - 10 times higher than expected based on comparisons with other cholesterol and sphingolipid-enriched membranes. Permeabilities to urea, ammonia and protons were measured and found to be moderately high for urea and ammonia at 8.85 ± 2.40 x 10^-7 and 6.84 ± 1.03 x 10^-2 respectively and high for protons at 8.84 ± 3.06 x 10^-2 cm/s. To examine whether caveolin or other integral membrane proteins were responsible for high permeabilities, liposomes designed to mimic the lipids of the inner and outer leaflets of the caveolar membrane were made. Osmotic water permeability to both liposome compositions were determined and a combined inner/outer leaflet water permeability was calculated and found to be close to that of native caveolae at 1.58 ± 1.1 x 10^-3 cm/s. In caveolae, activation energy for water flux was high (19.4 kcal/mol) and water permeability was not inhibited by HgCl₂, however aquaporin 1 was detectable by immunoblotting. Immunostaining of rat lung with AQP1 and caveolin antisera revealed very low levels of colocalization. We conclude that, although present, aquaporin water channels do not contribute significantly to the observed water flux and that caveolae have relatively high water and solute permeabilities due to the high degree of unsaturation in their fatty acyl chains.