Vascular endothelial growth factor (VEGF) is a potent angiogenic cytokine that also increases vascular permeability. Nitric oxide (NO) released from endothelial cells, after activation of endothelial NO synthase (eNOS), contributes to proangiogenic and permeability effects of VEGF. Angiopoietin-1 (Ang-1), via Tie2 receptors, shares many of the proangiogenic properties of VEGF on endothelial cells. However, in contrast to VEGF, Ang-1 protects blood vessels from increased plasma leakage, which contributes to their stabilization. Because eNOS-derived NO is central to increased permeability in response to VEGF, we investigated whether Ang-1 interferes with VEGF signaling to eNOS. We demonstrate that Ang-1 stimulation of endothelial cells inhibits VEGF-induced NO release and transendothelial permeability. In contrast to VEGF stimulation, Ang-1 causes a marked protein kinase C (PKC)–dependent increase in phosphorylation of eNOS on the inhibitory Thr497. Furthermore, using pharmacologic inhibitors, overexpression studies, and small interfering RNA-mediated gene silencing, we demonstrate that atypical PKCζ is responsible for phosphorylation of eNOS on Thr497 in response to Ang-1. In addition, PKCζ knockdown abrogates the capacity of Ang-1 to inhibit VEGF-induced NO release and endothelial permeability. Thus, inhibition of NO production by Ang-1, via phosphorylation of eNOS on Thr497 by PKCζ, is responsible, at least in part, for inhibition of VEGF-stimulated endothelial permeability by Ang-1.