Membrane microdomains or "lipid rafts" have emerged as essential functional modules of the cell, critical for the regulation of growth factor receptor-mediated responses. Herein we describe the dichotomy between caveolin-1 and caveolin-2, structural and regulatory components of microdomains, in modulating proliferation and differentiation. Caveolin-2 while caveolin-1 nerve growth factor (NGF) signaling and subsequent cell differentiation. Caveolin-2 does not appear to impair NGF receptor trafficking but elicits prolonged and stronger activation of MAPK (mitogen-activated protein kinase), Rsk2 (ribosomal protein S6 kinase 2), and CREB (cAMP response element binding protein). In contrast, caveolin-1 does not alter initiation of the NGF signaling pathway activation; rather, it acts, at least in part, by sequestering the cognate receptors, TrkA and p75, at the plasma membrane, together with the phosphorylated form of the downstream effector Rsk2, which ultimately prevents CREB phosphorylation. The non-phosphorylatable caveolin-1 serine 80 mutant (S80V), no longer inhibits TrkA trafficking or subsequent CREB phosphorylation. MC192, a monoclonal antibody towards p75 that does not block NGF binding, prevents exit of both NGF receptors (TrkA and p75) from lipid rafts. The results presented herein underline the role of caveolin and receptor signaling complex interplay in the context of neuronal development and tumorigenesis.