Endothelial cells undergoing angiogenesis express decorin, a small multifunctional proteoglycan. We have shown that decorin is causally involved in the formation of capillary-like structures and a decrease in apoptosis in endothelial cells cultured in a collagen lattice. Here we investigate signal transduction pathways mediating the effects of decorin. Reverse transcription-polymerase chain reaction demonstrated that p21 and p27, two inhibitors of cyclin-dependent kinases, were up-regulated by decorin induction. Decorin also increased protein levels of p21 and caused its translocation into the nucleus. p21 synthesis started 6 h after decorin addition and reached a plateau after 18 h, while cyclin A, which was also induced, peaked at 12 h and declined below basal levels within 24 h. These effects were mediated by the Akt/protein kinase B pathway. Akt phosphorylation at Thr-308 increased 4-fold and at Ser-473 1.4-fold within 10 min after decorin addition. Overexpression of dominant negative Akt inhibited the decorin-mediated induction of p21 and cyclin A, but had no effect on p27. These results show that decorin is a signaling molecule in sprouting endothelial cells where it acts via different pathways, one of them involving Akt/protein kinase B.