Pigment epithelium-derived factor (PEDF) is the most potent inhibitor of angiogenesis, suggesting that loss of PEDF contributes to proliferative diabetic retinopathy. However, the role of PEDF against retinal vascular hyperpermeability remains to be elucidated. We investigated here whether and how PEDF could inhibit the advanced glycation end product (AGE) signaling to vascular hyperpermeability. Intravenous administration of AGEs to normal rats not only increased retinal vascular permeability by stimulating vascular endothelial growth factor (VEGF) expression but also decreased retinal PEDF levels. Simultaneous treatments with PEDF inhibited the AGE-elicited VEGF-mediated permeability by down-regulating mRNA levels of p22(phox) and gp91(phox), membrane components of NADPH oxidase, and subsequently decreasing retinal levels of an oxidative stress marker, 8-hydroxydeoxyguanosine. PEDF also inhibited the AGE-induced vascular hyperpermeability evaluated by transendothelial electrical resistance by suppressing VEGF expression. Furthermore, PEDF decreased reactive oxygen species (ROS) generation in AGE-exposed endothelial cells by suppressing NADPH oxidase activity via down-regulation of mRNA levels of p22(PHOX) and gp91(PHOX). This led to blockade of the AGE-elicited Ras activation and NF-kappaB-dependent VEGF gene induction in endothelial cells. These results indicate that the central mechanism for PEDF inhibition of the AGE signaling to vascular permeability is by suppression of NADPH oxidase-mediated ROS generation and subsequent VEGF expression. Substitution of PEDF may offer a promising strategy for halting the development of diabetic retinopathy.