Background: TC10 is a small GTPase found in lipid raft microdomains of adipocytes. The protein undergoes activation in response to insulin, and plays a key role in the regulation of glucose uptake by the hormone. Results: TC10 requires high concentrations of magnesium in order to stabilize guanine nucleotide binding. Kinetic analysis of this process revealed that magnesium acutely decreased the nucleotide release and exchange rates of TC10, suggesting that the G protein may behave as a rapidly exchanging, and therefore active protein in vivo. However, in adipocytes, the activity of TC10 is not constitutive, indicating that mechanisms must exist to maintain the G protein in a low activity state in untreated cells. Thus, we searched for proteins that might bind to and stabilize TC10 in the inactive state. We found that Caveolin interacts with TC10 only when GDP-bound and stabilizes GDP binding. Moreover, knockdown of Caveolin 1 in 3T3-L1 adipocytes increased the basal activity state of TC10. Conclusions: Together these data suggest that TC10 is intrinsically active in vivo, but is maintained in the inactive state by binding to Caveolin 1 in 3T3-L1 adipocytes under basal conditions, permitting its activation by insulin.