The ultrastructural distribution of the ganglioside GM1 was investigated in A431 cells. After fixation, the cells were frozen in liquid nitrogen, freeze-substituted, and then embedded in Lowicryl resin at -45 degrees C. By use of the cholera toxin-binding subunit adsorbed to gold as a specific probe to label on the sections, GM1 was shown to be present in endocytic organelles, in the trans-Golgi network, and on the plasma membrane, but was not detectable in the endoplasmic reticulum. GM1 was not distributed uniformly over the plasma membrane but was concentrated approximately four-fold in non-coated invaginations. These were identified as caveolae by labeling frozen sections of cholera toxin-gold surface-labeled cells with antibodies to VIP-21/caveolin. The results strengthen the functional analogy between caveolae and sorting domains of the TGN in polarized epithelial cells.