The function of occludin remains elusive. Proposed roles include maintenance of tight junction barriers, signaling and junction remodeling. To investigate a potential role in mediating cytokine-induced changes in barrier properties, we measured barrier responses to interferon-γ plus TNFα in control, occludin-overexpressing and occludin knockdown MDCK II monolayers. MDCK cells show a complex response to cytokines characterized by a simultaneous increase in the transepithelial electrical resistance and a decrease in the barrier for large solutes. We observed that overexpression of occludin increased and occludin knockdown decreased sensitivity to cytokines as assessed by both these parameters. It is known that caveolin-1 interacts with occludin and is implicated in several models of cytokine-dependent barrier disruption; we found that occludin knockdown altered the subcellular distribution of caveolin-1 and that partitioning of caveolin into detergent-insoluble lipid rafts was influenced by changing occludin levels. Knockdown of caveolin decreased the cytokine-induced flux increase, whereas the increase in the electrical barrier was unaltered; the effect of double knockdown of occludin and caveolin was similar to that of occludin single knockdown, consistent with the possibility that they function in the same pathway. These results demonstrate that occludin is required for cells to transduce cytokine-mediated signals that either increase the electrical barrier or decrease the large solute barrier, possibly by coordinating the functions of caveolin-1.