Development of micro- and macrovascular disease in diabetes mellitus (DM) warrants a thorough investigation into the repertoire of endothelial cell (EC) responses to diabetic environmental cues. Using human umbilical vein EC (HUVEC) cultured in three-dimensional (3-D) native collagen I (NC) or glycated collagen I (GC), we observed capillary cord formation that showed a significant reduction in branching when cells were cultured in GC. To gain insight into the molecular determinants of this phenomenon, HUVEC subjected to GC vs. NC were studied using a PCR-selected subtraction approach. Nine different genes were identified as up- or downregulated in response to GC; among those, plasminogen activator inhibitor-1 (PAI-1) mRNA was found to be upregulated by GC. Western blot analysis of HUVEC cultured on GC showed an increase in PAI-1 expression. The addition of a neutralizing anti-PAI-1 antibody to HUVEC cultured in GC restored the branching pattern of formed capillary cords. In contrast, supplementation of culture medium with the constitutively active PAI-1 reproduced defective branching patterns in HUVEC cultured in NC. Ex vivo capillary sprouting in GC was unaffected in PAI-1 knockout mice but was inhibited in wild-type mice. This difference persisted in diabetic mice. In conclusion, the PCR-selected subtraction technique identified PAI-1 as one of the genes characterizing an early response of HUVEC to the diabetic-like interstitial environment modeled by GC and responsible for the defective branching of endothelial cells. We propose that an upregulation of PAI-1 is causatively linked to the defective formation of capillary networks during wound healing and eventual vascular dropout characteristic of diabetic nephropathy.