Using total internal reflection fluorescence microscopy (TIR-FM), fluorescence recovery after photobleaching (FRAP), and other light microscopy techniques, we analyzed the dynamics, the activation, and the assembly of caveolae labeled with fluorescently tagged caveolin-1 (Cav1). We found that when activated by simian virus 40 (SV40), a nonenveloped DNA virus that uses caveolae for cell entry, the fraction of mobile caveolae was dramatically enhanced both in the plasma membrane (PM) and in the caveosome, an intracellular organelle that functions as an intermediate station in caveolar endocytosis. Activation also resulted in increased microtubule (MT)-dependent, long-range movement of caveolar vesicles. We generated heterokaryons that contained GFP- and RFP-tagged caveolae by fusing cells expressing Cav1-GFP and -RFP, respectively, and showed that even when activated, individual caveolar domains underwent little exchange of Cav1. Only when the cells were subjected to transient cholesterol depletion, did the caveolae domain exchange Cav1. Thus, in contrast to clathrin-, or other types of coated transport vesicles, caveolae constitute stable, cholesterol-dependent membrane domains that can serve as fixed containers through vesicle traffic. Finally, we identified the Golgi complex as the site where newly assembled caveolar domains appeared first.