Clostridium perfringens epsilon toxin (ETX) is responsible for causing the economically devastating disease, enterotoxaemia, in livestock. It is well accepted that ETX causes blood brain barrier (BBB) permeability, however the mechanisms involved in this process are not well understood. Using in vivo and in vitro methods, we determined that ETX causes BBB permeability in mice by increasing caveolae-dependent transcytosis in brain endothelial cells. When mice are intravenously injected with ETX, robust ETX binding is observed in the microvasculature of the central nervous system (CNS) with limited to no binding observed in the vasculature of peripheral organs, indicating that ETX specifically targets CNS endothelial cells. ETX binding to CNS microvasculature is dependent on MAL expression, as ETX binding to CNS microvasculature of MAL-deficient mice was not detected. ETX treatment also induces extravasation of molecular tracers including 376Da fluorescein salt, 60kDA serum albumin, 70kDa dextran, and 155kDA IgG. Importantly, ETX-induced BBB permeability requires expression of both MAL and caveolin-1, as mice deficient in MAL or caveolin-1 did not exhibit ETX-induced BBB permeability. Examination of primary murine brain endothelial cells revealed an increase in caveolae in ETX-treated cells, resulting in dynamin and lipid raft-dependent vacuolation without cell death. ETX-treatment also results in a rapid loss of EEA1 positive early endosomes and accumulation of large, RAB7-positive late endosomes and multivesicular bodies. Based on these results, we hypothesize that ETX binds to MAL on the apical surface of brain endothelial cells, causing recruitment of caveolin-1, triggering caveolae formation and internalization. Internalized caveolae fuse with early endosomes which traffic to late endosomes and multivesicular bodies. We believe that these multivesicular bodies fuse basally, releasing their contents into the brain parenchyma.