Endostatin, the COOH-terminal fragment of collagen XVIII, is a potent inhibitor of angiogenesis and tumor growth. To understand the mechanisms behind endostatin action, we analyzed the plasma membrane- extracellular matrix interactions of recombinant human endostatin in cultured microvascular endothelial cells. We observed that endostatin induced rapid clustering of alpha5beta1 integrin associated with actin stress fibers and its concomitant colocalization with the membrane anchor protein caveolin-1. Furthermore, endostatin could be coimmunoprecipitated with alpha5beta1 and caveolin-1 from endothelial cell extracts. Endostatin treatment induced phosphatase-dependent activation of caveolin-associated Src family kinases. The disassembly of actin stress fibers and focal adhesions by endostatin was found to occur via activation of Src and in a tyrosyl phosphatase-dependent manner. The endostatin-treated cells void of the focal adhesions had impaired ability to deposit fibronectin into their extracellular matrices and were unable to migrate in response to basic fibroblast growth factor in a wounding experiment. These results indicate that recombinant endostatin interacts with alpha5beta1 integrin and caveolin-1 at the endothelial cell surface. In addition, the antimigratory effect of endostatin involves phosphatase-dependent Src activation and impaired cell-matrix interactions.