Caveolae orchestrate the dominant placental angiogenic growth factor fibroblast growth factor 2 (FGF2) signaling primarily via FGF receptor 1 (FGFR1) in placental artery endothelial cells; however, how the proximal FGF2/FGFR1 signaling is organized in the caveolae is obscure. We have shown in the present study that the FGFR substrate 2alpha (FRS2alpha) is physically associated with FGFR1, and both are targeted to the caveolae via interaction with caveolin-1 in ovine fetoplacental artery endothelial cells. Treatment with FGF2 rapidly stimulated time- and concentration-dependent FRS2alpha tyrosine phosphorylation and recruited the cytosolic growth factor receptor-bound protein 2 (GRB2)-GRB2-associated binding protein 1 (GAB1) complex to the caveolae, where they formed a ternary complex with FRS2alpha. Disruption of caveolae by cholesterol depletion with methyl-beta-cyclodextrin inhibited FGF2-induced FRS2alpha tyrosine phosphorylation, and it blocked the FGF2-induced recruitment of GRB2 and GAB1 to the caveolae and formation of the FRS2alpha-GRB2-GAB1 complex in the caveolae, as well as activation of the PI3K/AKT1 and MAPK1/2 pathways. Thus, these findings have demonstrated that the proximal fibroblast growth factor (FGF2/FGFR1) signaling is compartmentalized in the placental endothelial caveolae via the FGFR substrate 2α that mediates formation of a FRS2α-GRB2-GAB1 complex.