1. The role of smooth muscle-derived lipoprotein lipase (LPL) that translocates to the endothelium surface on vascular dysfunction during atherogenesis is unclear. Thus, the role of vascular LPL on blood vessel reactivity was assessed in transgenic mice that specifically express human LPL in the circulatory system. 2. Aortic free fatty acids (FFAs) were increased by 69% in the transgenic mice expressing human LPL in aortic smooth muscle cells (L2LPL) compared with their non-transgenic littermates (L2). 3. Contractility to KCl was increased by 33% in aortae of L2LPL mice. Maximal contraction to phenylephrine (PE) was comparable in L2 and L2LPL animals, while the frequency of tonus oscillation to PE increased by 104% in L2LPL mice. 4. In L2LPL animals, *NO mediated relaxation to acetylcholine (ACh) and ATP was reduced by 47 and 32%, respectively. In contrast, endothelium-independent relaxation to sodium nitroprusside (SNP) was not different in both groups tested. 5. ATP-initiated Ca(2+) elevation that triggers *NO formation was increased by 41% in single aortic endothelial cells freshly isolated from L2LPL animals. 6. In aortae from L2LPL mice an increased *O(2)(-) release occurred that was normalized by removing the endothelium and by the NAD(P)H oxidase inhibitor DPI and the PKC inhibitor GF109203X. 7. The reduced ACh-induced relaxation in L2LPL animals was normalized in the presence of SOD, indicating that the reduced relaxation is due, at least in part, to enhanced *NO scavenging by *O(2)(-). 8. These data suggest that despite normal lipoprotein levels increased LPL-mediated FFAs loading initiates vascular dysfunction via PKC-mediated activation of endothelial NAD(P)H oxidase. Thus, vascular LPL activity might represent a primary risk factor for atherosclerosis independently from cholesterol/LDL levels.