Recent studies have established a role for tumour-secreted exosomes in cancer development and progression. Exosomes are enriched in cholesterol and sphingolipids, and our recent work revealed a concomitant alteration of lipid raft and exosome proteomes from prostate cancer PC3 cells, when caveolae formation was induced by the co-factor PTRF/cavin-1. We previously confirmed that cavin-1 expression altered exosomal but not cellular content suggesting modulation of trafficking pathways. Here we investigated the effect of cavin-1 expression on the function of PC3 exosomes. Electron microscopy showed that exosome morphology was not altered by cavin-1. Quantitation of exosome size using dynamic light scattering revealed a significant reduction in the mean exosome diameter and number of exosomes released per cell for cavin-1 cells compared to control cells. To investigate the biological significance of the change in exosome content we examined the exosome function in vitro using 3 cell models: osteoclast differentiation, osteoblast proliferation and macrophage polarisation. Exosomes from PC3 cells induced differentiation of RAW264.7 cells to osteoclast-like multi-nucleate, TRAP-expressing cells, and stimulated human primary osteoblast proliferation compared to control. In the same assays, exosomes derived from cavin-1 PC3 cells failed to induce multinucleate osteoclasts and had reduced ability to stimulate osteoblast proliferation. In contrast, exosomes from control and cavin-1 cells had no effect on differentiation of monocytes into macrophages. These results demonstrate selective biological function for PC3-derived exosomes. Using fluorescently-labelled exosomes we demonstrated reduced uptake to target cells of cavin-1 derived exosomes compared to control. Proteinase K and neuraminidase treatment to remove exosomal surface protein and sialic acid, modulated exosome uptake into RAW264.7 cells. In summary, our data show that cavin-1 modulates the number, size, content and function of PC3 exosomes. Taken together with our previous report, we suggest modulation of lipid raft content and dynamics as the molecular mechanism.