Nitric oxide (NO) regulates the function of perivascular cells (pericytes), including hepatic stellate cells (HSC), mainly by activating cGMP and cGMP-dependent kinase (PKG) via NO/cGMP paracrine signaling. Although PKG is implicated in integrin-mediated cell adhesion to extracellular matrix, whether or how PKG signaling regulates the assembly of focal adhesion complexes (FA) and migration of HSC is not known. With the help of complementary molecular and cell biological approaches, we demonstrate here that activation of PKG signaling in HSC inhibits vascular tubulogenesis, migration/chemotaxis, and assembly of mature FA plaques, as assessed by vascular tubulogenesis assays and immunofluorescence localization of FA markers such as vinculin and vasodilator-stimulated phosphoprotein (VASP). To determine whether PKG inhibits FA assembly by phosphorylation of VASP at Ser-157, Ser-239, and Thr-278, we mutated these putative phosphorylation sites to alanine (VASP3A, phosphoresistant mutant) or aspartic acid (VASP3D, phosphomimetic), respectively. Data generated from these two mutants suggest that the effect of PKG on FA is independent of these three phosphorylation sites. In contrast, activation of PKG inhibits the activity of small GTPase Rac1 and its association with the effector protein IQGAP1. Moreover, PKG activation inhibits the formation of a trimeric protein complex containing Rac1, IQGAP1, and VASP. Finally, we found that expression of a constitutively active Rac1 mutant abolishes the inhibitory effects of PKG on FA formation. In summary, our data suggest that activation of PKG signaling in pericytes inhibits FA formation by inhibiting Rac1.