The development of a new vascular network is essential for the onset and progression of many pathophysiologic processes. Cyclooxygenase-2 displays a proangiogenic activity in in vitro and in vivo models, mediated principally through its metabolite prostaglandin E(2) (PGE(2)). Here, we provide evidence for a novel signaling route through which PGE(2) activates the Alk5-Smad3 pathway in endothelial cells. PGE(2) induces Alk5-dependent Smad3 nuclear translocation and DNA binding, and the activation of this pathway involves the release of active TGFbeta from its latent form through a process mediated by the metalloproteinase MT1-MMP, whose membrane clustering is promoted by PGE(2). MT1-MMP-dependent transforming growth factor beta (TGFbeta) signaling through Alk5 is also required for PGE(2)-induced endothelial cord formation in vitro, and Alk5 kinase activity is required for PGE(2)-induced neovascularization in vivo. These findings identify a novel signaling pathway linking PGE(2) and TGFbeta, 2 effectors involved in tumor growth and angiogenesis, and reveal potential targets for the treatment of angiogenesis-related disorders.