Tissue Inhibitor of metalloproteinases-3 (TIMP-3) is a potent matrix-bound angiogenesis inhibitor. Mutations in TIMP-3 cause Sorsby Fundus Dystrophy, a dominant inherited, early onset macular degenerative disease, with choroidal neovascularization causing a loss of vision in the majority of patients. Here we report that expression of S156C TIMP-3 mutation in endothelial cells results in an abnormal localization of the protein, increased glycosylation, decreased matrix metalloproteinase inhibitory activity, and increased vascular endothelial growth factor (VEGF) binding with a consequent increase in VEGF-dependent migration and tube formation. These enhanced signaling events appear to be mediated as a consequence of a post-transcriptionally regulated increase in the expression of membrane-associated VEGFR-2 in endothelial cells of Timp-3(156/156) mutant mice as well as in human Sorsby fundus dystrophy eyes. Understanding the mechanism(s) by which mutant TIMP-3 can induce abnormal neovascularization provides important insight into the pathophysiology of a number of diseases with increased angiogenesis.