We immunohistochemically evaluated 94 cases of urothelial carcinoma (UC) of the urinary bladder for the expression of caveolin (Cav)-1 and Cav-2. Neither benign urothelium present in 22 cases nor flat carcinoma in situ present in 10 cases stained for Cav-1 or Cav-2. Thirty-five (37%) of 94 cases and 45 (51%) of 89 cases of UC stained positively for Cav-1 and Cav-2, respectively. The percentages of positive cases for Cav-1 in grades 1, 2, and 3 tumors were 0% (0/6), 0% (0/25), and 56% (35/63), respectively (P < .001), and for Cav-2, 0% (0/6), 13% (3/23), and 70% (42/60), respectively (P < .001). Multivariate analysis showed no significant correlation between tumor stage and Cav-1 or Cav-2 expression after correction for tumor grade. Eighty-two percent (14/17) of cases with squamous differentiation were positive for Cav-1 compared with 43% (20/46) of grade 3 tumors without squamous differentiation (P < .001). These results indicate a positive correlation of the expression of Cav-1 and Cav-2 with tumor grade and squamous features of UC and suggest that Cav-1 and Cav-2 be studied further for a possible role in tumor progression and squamous differentiation.