Regulatory volume decrease (RVD) is a protective mechanism that allows mammalian cells to restore their volume when exposed to a hypotonic environment. A key component of RVD is the release of K⁺,Cl^-, and organic osmolytes such as taurine which then drives osmotic water efflux. Previous experiments have indicated that caveolin-1, a coat protein of caveolae microdomains in the plasma membrane, promotes the swelling-induced Cl^- current (I_Cl,swell) through volume-regulated anion channels (VRAC). However, it is not known whether the stimulation by caveolin-1 is restricted to the release of Cl^- or whether it also affects the swelling-induced release of other components such as organic osmolytes. To address this problem, we have studied I_Cl,swell and the hypotonicity-induced release of taurine and ATP in wild type Caco-2 cells that are caveolin-1 deficient and in stably transfected Caco-2 cells that express caveolin-1. Electrophysiological characterization of wild type and stably transfected Caco-2 showed that caveolin-1 promoted I_Cl,swell, but not CFTR (cystic fibrosis transmembrane conductance regulator) currents. Furthermore, caveolin-1 expression stimulated the hypotonicity-induced release of taurine and ATP in stably transfected Caco-2 cells grown as a monolayer. Interestingly, the effect of caveolin-1 was polarized since only the release at the basolateral membrane, but not at the apical membrane, was increased. It is therefore concluded that caveolin-1 facilitates the hypotonicity-induced release of Cl^-, taurine and ATP and that in polarized epithelial cells the effect of caveolin-1 is compartmentalized to the basolateral membrane.