We have reported previously that pigment epithelium-derived factor (PEDF) can, via γ-secretase-mediated events, inhibit VEGF-induced angiogenesis in microvascular endothelial cells by both (a) cleavage and intracellular translocation of a C-terminal fragment of VEGF receptor-1 (VEGFR1) and (b) inhibition of VEGF-induced phosphorylation of VEGFR1. Using site-direct mutagenesis and transfection of wild type and mutated receptors into endothelial cells, we showed that transmembrane cleavage of VEGFR1 occurs at valine 767 and that a switch from valine to alanine at this position prevented cleavage and formation of a VEGFR1 intracellular fragment. Using siRNA to selectively knock down protein-tyrosine phosphatases (PTPs) in endothelial cells, we demonstrated that vascular endothelial PTP is responsible for dephosphorylation of activated VEGFR1. PEDF up-regulation of full-length presenilin 1 (Fl.PS1) facilitated the association of vascular endothelial PTP and VEGFR1. Knockdown of Fl.PS1 prevented dephosphorylation of VEGFR1, whereas up-regulation of Fl.PS1 stimulated VEGFR1 dephosphorylation. Fl.PS1 associated with VEGFR1 within 15 min after PEDF treatment. In conclusion, we determined the PEDF-mediated events responsible for VEGFR1 signaling and identified full-length presenilin as a critical adaptor molecule in the dephosphorylation of VEGFR1. This greater understanding of the regulation of VEGFR1 signaling will help identify novel anti-VEGF therapeutic strategies.