Caveolin-1(CAV1) is a tyrosine-phosphorylated scaffold protein of caveolae with multiple interacting partners. It functions both as an oncogene and a tumour suppressor depending upon the cellular contexts. In the early stage of colorectal cancers (CRC), CAV1 suppresses tumour progression, while over-expression of CAV1 reduced the tumourigenicity of colon carcinoma cells. In contrast, elevated level of CAV1 was reported in stage III CRC. To address this ambiguity, we studied the functional role and the regulation of CAV1 expression during colonocyte differentiation and apoptosis. Here, we reported for the first time that CAV1 expression was increased during colonocyte differentiation and mediated butyrate-induced differentiation and apoptosis of HT29 cells. CAV1 expression was silenced by promoter hypermethylation in HT-29 cells and reactivated by prolonged histone hyperacetylation of the promoter upon treatment of the cells with butyrate. However, the methylation status was unaltered by butyrate. We for the first time showed that HDAC inhibitor-mediated transactivation of CAV1 was regulated by methylation density of the promoter. Our study further explains the underlying mechanisms of the anti-cancer property of butyrate in CRC.