Previously it has been reported that caveolin-1 (cav-1) has antiapoptotic activities in prostate cancer cells and functions downstream of androgenic stimulation. In this study, we demonstrate that cav-1 overexpression significantly reduced thapsigargin (Tg)-stimulated apoptosis. Examination of the phosphatidylinositol 3-kinase (PI3-K)/Akt signaling cascade revealed higher activities of PDK1 and Akt but not PI3-K in cav-1-stimulated cells compared to control cells. We subsequently found that cav-1 interacts with and inhibits serine/threonine protein phosphatases PP1 and PP2A through scaffolding domain binding site interactions. Deletion of the cav-1 scaffolding domain significantly reduces phosphorylated Akt and cell viability compared with wild-type cav-1. Analysis of potential substrates for PP1 and PP2A revealed that cav-1-mediated inhibition of PP1 and PP2A leads to increased PDK1, Akt, and ERK1/2 activities. We demonstrate that increased Akt activities are largely responsible for cav-1-mediated cell survival using dominant-negative Akt mutants and specific inhibitors to MEK1/MEK and show that cav-1 increases the half-life of phosphorylated PDK1 and Akt after inhibition of PI3-K by LY294002. We further demonstrate that cav-1-stimulated Akt activities lead to increased phosphorylation of multiple Akt substrates, including GSK3, FKHR, and MDM2. In addition, overexpression of cav-1 significantly increases translocation of phosphorylated androgen receptor to nucleus. Our studies therefore reveal a novel mechanism of Akt activation in prostate cancer and potentially other malignancies.