The endocytic function of caveolae was challenged by taking advantage of a cell-free assay directly measuring the detachment of receptor-containing vesicles from isolated plasma membranes. Plasma membranes from cultured cells surface-labeled with 125I-cholera toxin (segregating in caveolae) were isolated as described previously. Following incubation of these labeled membranes in the presence of nucleotide(s) and cytosol, a significant proportion of the initially membrane-associated radioactivity was released into the incubation medium in sedimentable form (14*10(6 )g). Results of biochemical, morphological, and fractionation analysis of the material containing the released radioactivity directly demonstrated that caveolae are plasma membrane domains involved in an endocytic process and resulting in the formation of caveolae-derived vesicles. In addition, these studies allowed a direct comparison of caveolae- and clathrin-coated pit-mediated endocytosis and reveal that these two processes diverge in terms of kinetics, cytosol and nucleotide requirements as well as in terms of the density and size of the endocytic vesicles formed.