Caveolin-1 (Cav-1) can ambiguously behave as either tumor suppressor or oncogene depending on its phosphorylation state and the type of cancer. In this study we show that Cav-1 was phosphorylated on tyrosine 14 (pCav-1) by Src-kinase family members in various human cell lines and primary mouse cultures of rhabdomyosarcoma (RMS), the most frequent soft-tissue sarcoma affecting childhood. Cav-1 overexpression in the human embryonal RD or alveolar RH30 cells yielded increased pCav-1 levels and reinforced the phosphorylation state of either ERK or AKT kinase, respectively, in turn enhancing in vitro cell proliferation, migration, invasiveness and chemoresistance. In contrast, reducing the pCav-1 levels by administration of a Src-kinase inhibitor or through targeted Cav-1 silencing counteracted the malignant in vitro phenotype of RMS cells. Consistent with these results, xenotransplantation of Cav-1 overexpressing RD cells into nude mice resulted in substantial tumor growth in comparison to control cells. Taken together, these data point to pCav-1 as an important and therapeutically valuable target for overcoming the progression and multidrug resistance of RMS.