Balloon angioplasty disrupts the protective endothelial lining of the arterial wall, rendering arteries susceptible to thrombosis and intimal thickening. We show here that vascular endothelial growth factor (VEGF), an endothelial cell mitogen, is upregulated in medial smooth muscle cells of the arterial wall in response to balloon injury. Both protein kinase C (PKC) and tyrosine kinase pp60src mediate augmented VEGF expression. In contrast, nitric oxide (NO) donors inhibit PKC-induced VEGF upregulation by interfering with binding of the transcription factor activator protein-1 (AP-1) to the VEGF promoter. Inhibition of VEGF promoter activation suggests that NO secreted by a restored endothelium functions as the negative feedback mechanism that downregulates VEGF expression to basal levels. Administration of a neutralizing VEGF antibody impaired reendothelialization following balloon injury performed in vivo. These findings establish a reciprocal relation between VEGF and NO in the endogenous regulation of endothelial integrity following arterial injury.