Caveolae are submicroscopic, plasma membrane pits that are abundant in many mammalian cell types. The past few years have seen a quantum leap in our understanding of the formation, dynamics and functions of these enigmatic structures. Caveolae have now emerged as vital plasma membrane sensors that can respond to plasma membrane stresses and remodel the extracellular environment. Caveolae at the plasma membrane can be removed by endocytosis to regulate their surface density or can be disassembled and their structural components degraded. Coat proteins, called cavins, work together with caveolins to regulate the formation of caveolae but also have the potential to dynamically transmit signals that originate in caveolae to various cellular destinations. The importance of caveolae as protective elements in the plasma membrane, and as membrane organizers and sensors, is highlighted by links between caveolae dysfunction and human diseases, including muscular dystrophies and cancer.