Recently, ID-1 (inhibitor of differentiation/DNA binding) is suggested as an oncogene and is reported to promote cell proliferation, invasion, and survival in several types of human cancer cells through multiple signaling pathways. However, how Id-1 interacts with these pathways and the immediate downstream effectors of the Id-1 protein are not known. In this study, using a yeast two-hybrid screening technique, we identified a novel Id-1-interacting protein, caveolin-1 (Cav-1), a cell membrane protein, and a positive regulator of cell survival and metastasis in prostate cancer. Using an immunoprecipitation method, we found that the helix-loop-helix domain of the Id-1 protein was essential for the physical interaction between Id-1 and Cav-1. In addition, we also demonstrated that the physical interaction between Id-1 and Cav-1 played a key role in the epithelial-mesenchymal transition and increased cell migration rate as well as resistance to taxol-induced apoptosis in prostate cancer cells. Furthermore, our results revealed that this effect was regulated by Id-1-induced Akt activation through promoting the binding activity between Cav-1 and protein phosphatase 2A. Our study demonstrates a novel Id-1 binding partner and suggests a molecular mechanism that mediates the function of Id-1 in promoting prostate cancer progression through activation of the Akt pathway leading to cancer cell invasion and resistance to anticancer drug-induced apoptosis.