In cancer, VEGF-induced increase in vascular permeability results in increased interstitial pressure, reducing perfusion and increasing hypoxia, which reduce delivery of chemotherapeutic agents and increase resistance to ionizing radiation. Here, we show that both TIMP-2 and Ala + TIMP-2, a TIMP-2 mutant without matrix metalloproteinase inhibitory activity, antagonize the VEGF-A–induced increase in vascular permeability, both in vitro and in vivo. Like other agents known to preserve endothelial barrier function, TIMP-2 elevates cytosolic levels of cAMP and increases cytoskeletal-associated vascular endothelial cadherin in human microvascular endothelial cells. All of these effects are completely ablated by selective knockdown of integrin α3β1 expression, expression of a dominant negative protein tyrosine phosphatase Shp-1 mutant, administration of the protein tyrosine phosphatase inhibitor orthovanadate, or the adenylate cyclase inhibitor SQ22536. This TIMP-2–mediated inhibition of vascular permeability involves an integrin α3β1-Shp-1-cAMP/protein kinase A-dependent vascular endothelial cadherin cytoskeletal association, as evidenced by using siRNAs to integrin α3β1 and Shp-1, or treatment with Shp-1 inhibitor NSC87877 and protein kinase A inhibitor H89. Our results demonstrate the potential utility for TIMP-2 in cancer therapy through “normalization” of vascular permeability in addition to previously described antiangiogenic effects.