Increased retinal vasopermeability contributes to diabetic retinopathy, the leading cause of blindness in working-age adults. Despite clinical progress, effective therapy remains a major need. Vasoinhibins, a family of peptides derived from the protein hormone prolactin (and inclusive of the 16-kDa fragment of prolactin), antagonize the proangiogenic effects of VEGF, a primary mediator of retinal vasopermeability. Here, we demonstrate what we believe to be a novel function of vasoinhibins as inhibitors of the increased retinal vasopermeability associated with diabetic retinopathy. Vasoinhibins inhibited VEGF-induced vasopermeability in bovine aortic and rat retinal capillary endothelial cells in vitro. In vivo, vasoinhibins blocked retinal vasopermeability in diabetic rats and in response to intravitreous injection of VEGF or of vitreous from patients with diabetic retinopathy. Inhibition by vasoinhibins was similar to that achieved following immunodepletion of VEGF from human diabetic retinopathy vitreous or blockage of NO synthesis, suggesting that vasoinhibins inhibit VEGF-induced NOS activation. We further showed that vasoinhibins activate protein phosphatase 2A (PP2A), leading to eNOS dephosphorylation at Ser1179 and, thereby, eNOS inactivation. Moreover, intravitreous injection of okadaic acid, a PP2A inhibitor, blocked the vasoinhibin effect on endothelial cell permeability and retinal vasopermeability. These results suggest that vasoinhibins have the potential to be developed as new therapeutic agents to control the excessive retinal vasopermeability observed in diabetic retinopathy and other vasoproliferative retinopathies.