Most mammalian cells have in their plasma membrane at least two types of lipid microdomains, non-invaginated lipid rafts and caveolae. Glycosylphosphatidylinositol (GPI)-anchored proteins constitute a class of proteins that are enriched in rafts but not caveolae at steady state. We have analyzed the effects of abolishing GPI biosynthesis on rafts, caveolae, and cholesterol levels. GPI-deficient cells were obtained by screening for resistance to the pore-forming toxin aerolysin, which uses this class of proteins as receptors. Despite the absence of GPI-anchored proteins, mutant cells still contained lipid rafts, indicating that GPI-anchored proteins are not crucial structural elements of these domains. Interestingly, the caveolae-specific membrane proteins, caveolin-1 and 2, were up-regulated in GPI-deficient cells, in contrast to flotillin-1 and GM1, which were expressed at normal levels. Additionally, the number of surface caveolae was increased. This effect was specific since recovery of GPI biosynthesis by gene recomplementation restored caveolin expression and the number of surface caveolae to wild type levels. The inverse correlation and caveolin-1 was confirmed by the observation that overexpression of caveolin-1 in wild type cells led to a decrease in the expression of GPI-anchored proteins. In cells lacking caveolae, the absence of GPI-anchored proteins caused an increase in cholesterol levels, suggesting a possible role of GPI-anchored proteins in cholesterol homeostasis, which in some cells, such as Chinese hamster ovary cells, can be compensated by caveolin up-regulation.