The intracellular signaling mechanisms underlying postnatal angiogenesis are incompletely understood. Herein we show that Grb-2–associated binder 1 (Gab1) plays a critical role in ischemic and VEGF-induced angiogenesis. Endothelium-specific Gab1 KO (EGKO) mice displayed impaired angiogenesis in the ischemic hindlimb despite normal induction of VEGF expression. Matrigel plugs with VEGF implanted in EGKO mice induced fewer capillaries than those in control mice. The vessels and endothelial cells (ECs) derived from EGKO mice were defective in vascular sprouting and tube formation induced by VEGF. Biochemical analyses revealed a substantial reduction of endothelial NOS (eNOS) activation in Gab1-deficient vessels and ECs following VEGF stimulation. Interestingly, the phosphorylation of Akt, an enzyme known to promote VEGF-induced eNOS activation, was increased in Gab1-deficient vessels and ECs whereas protein kinase A (PKA) activity was significantly decreased. Introduction of an active form of PKA rescued VEGF-induced eNOS activation and tube formation in EGKO ECs. Reexpression of WT or mutant Gab1 molecules in EGKO ECs revealed requirement of Gab1/Shp2 association for the activation of PKA and eNOS. Taken together, these results identify Gab1 as a critical upstream signaling component in VEGF-induced eNOS activation and tube formation, which is dependent on PKA. Of note, this pathway is conserved in primary human ECs for VEGF-induced eNOS activation and tube formation, suggesting considerable potential in treatment of human ischemic diseases.