Invadopodia are ventral membrane protrusions through which invasive cancer cells degrade the extracellular matrix. They are thought to function in the migration of cancer cells through tissue barriers, which is necessary for cancer invasion and metastasis. Although many protein components of invadopodia have been identified, the organization and the role of membrane lipids in invadopodia are not well understood. In this study, the role of lipid rafts, which are cholesterol-enriched membrane microdomains, in the assembly and function of invadopodia in human breast cancer cells was investigated. Lipid rafts are enriched, internalized, and dynamically trafficked at invadopodia sites. Perturbation of lipid raft formation due to depleting or sequestering membrane cholesterol blocked the invadopodia-mediated degradation of the gelatin matrix. Caveolin-1 (Cav-1), a resident protein of lipid rafts and caveolae, accumulates at invadopodia and colocalizes with the internalized lipid raft membranes. Membrane type 1 matrix metalloproteinase (MT1-MMP), a matrix proteinase associated with invadopodia, is localized at lipid raft-enriched membrane fractions and cotrafficked and colocalized with Cav-1 at invadopodia. The small interfering RNA-mediated silencing of Cav-1 inhibited the invadopodia-mediated and MT1-MMP-dependent degradation of the gelatin matrix. Furthermore, Cav-1 and MT1-MMP are coexpressed in invasive human breast cancer cell lines that have an ability to form invadopodia. These results indicate that invadopodia are the sites where enrichment and trafficking of lipid rafts occur and that Cav-1 is an essential regulator of MT1-MMP function and invadopodia-mediated breast cancer cell invasion.