Regulation of epithelial and endothelial permeability is essential for proper function of compartmentalized organisms, and tyrosine phosphorylation plays an important role in this process. We analyzed the impact of protein tyrosine phosphatase (PTP) inhibition on the structure of endothelial junctional proteins. In human umbilical vein endothelial cells (HUVECs) the PTP inhibitors phenylarsine oxide (PAO) and pervanadate induced proteolysis of the tight junction protein occludin. Occludin proteolysis was inhibited by the metalloproteinase inhibitor 1,10-phenanthroline (PHEN), but not by inhibitors against other types of proteases. The junctional proteins ZO-1, cadherin and beta-catenin were not cleaved. Under conditions of occludin proteolysis, PAO treatment elevated permeability for FITC-dextran. Simultaneous incubation of HUVECs with PAO and PHEN inhibited the rise in permeability by more than 60%. PAO treatment lead to progressive disappearance of occludin from the cell periphery. In contrast, ZO-1, cadherin and beta-catenin retained their positions at the sites of intercellular contact. Simultaneous administration of PAO and PHEN greatly prevented the redistribution of occludin. These results demonstrate a selective cleavage of occludin by a metalloproteinase and suggest that this process can contribute to the control of paracellular permeability in endothelial cells.