Acute changes in pressure or shear stress induce the rapid release of nitric oxide (NO) from the vascular endothelium resulting in vasodilation. Endothelial nitric oxide synthase (eNOS) regulates this flow-induced NO secretion. The subcellular location of flow-induced eNOS activity in the endothelium in vivo as well as the mechanisms by which hemodynamic forces regulate eNOS activity are unknown. The luminal cell surface of the endothelium, which is directly exposed to circulating blood stressors, has been examined for eNOS expression and functional activity. Immunoelectron microscopy of rat lung tissue shows eNOS labeling on the endothelial cell surface primarily within caveolae. Subcellular fractionation to purify luminal endothelial cell plasma membranes and their caveolae directly from rat lungs reveals that eNOS is not only concentrated but also enzymatically active in caveolae. Increasing vascular flow and pressure in situ rapidly activates caveolar eNOS with apparent eNOS dissociation from caveolin and association with calmodulin. Hemodynamic forces resulting from increased flow appear to transmit through caveolae to release eNOS from its inhibitory association with caveolin, apparently to allow more complete activation by calmodulin and other possible effectors. These data demonstrate a physiological relevant mechanotransduction event directly in caveolae at the luminal endothelial cell surface. Caveolae may serve as flow-sensing organelles with the necessary molecular machinery to transduce rapidly, mechanical stimuli and thereby regulate eNOS activity.