The calcium-sensing receptor (CaR) is a G protein-coupled, seven-transmembrane receptor and resides within caveolin-rich membrane domains in bovine parathyroid cells. The proenzyme of calpain 2 (m-calpain) is a heterodimeric calcium-dependent cysteine protease consisting of catalytic and regulatory subunits. The effects of calcium on the enzyme include activation, autolysis, and subunit dissociation. Here, we examine the potential role of caveolin-1 and caveolae in regulating the cellular distribution and function of m-calpain in parathyroid cells. We show that the inactive heterodimeric forms of m-calpain are concentrated in caveolin-rich membrane fractions prepared from parathyroid cells incubated with low extracellular calcium (Ca2+(o)). In contrast, in cells incubated with 3 mm Ca2+(o), which activates the CaR and increases intracellular calcium, there is a reduction in m-calpain in association with an increase in CaR protein and phosphorylated protein kinase C alpha and beta in caveolin-rich fractions. To assess the impact of activation of calpain on CaR protein in caveolar fractions, we analyzed the effects of m-calpain on the CaR. Activation of the CaR with high Ca2+(o) induced the release of lower molecular weight fragments of the receptor into the cell culture medium, and calpain inhibitors blocked this effect. Moreover, the fragments of the CaR as well as caveolin-1, m-calpain, and alkaline phosphatase were localized in membrane vesicles shed by parathyroid cells, supporting the association of these proteins in living cells. Treatment of CaR proteins in vitro with m-calpain also resulted in the appearance of lower molecular weight fragments of the CaR. Our data suggest that localization of m-calpain within caveolae may contribute to maintenance of the enzyme in an inactive state and that m-calpain may also contribute to the regulation of CaR levels.