Recent experimental evidence points to the possibility that cell surface-associated caveolae may participate in mechanotransduction. The particular shape of caveolae suggests that these structures serve to prevent exposure of putative mechanosensors residing within these membrane invaginations to shear stresses at magnitudes associated with initiation of cell signaling. Accordingly, we numerically analyzed the fluid flow in and around caveolae using the equation of motion for flow of plasma at low Reynolds numbers and assuming no slip-condition on the membrane. The plasma velocity inside a typical caveola and the shear stress acting on its membrane are markedly reduced compared to the outside membrane. Computation of the diffusion field in the vicinity of a caveola under flow, however, revealed a rapid equilibration of agonist concentration in the fluid inside a caveola with the outside plasma. Western blots and immunocytochemistry support the role of caveolae as shear stress shelters for putative membrane-bound mechanoreceptors such as flk-1. Our results, therefore, suggest that caveolae serve to reduce the fluid shear stress acting on receptors in their interior, while allowing rapid diffusion of ligands into the interior. This mechanism may permit differential control of flow and ligand activation of flk-1 receptor in the presence of ligands.