Tissue inhibitors of metalloproteinases (TIMPs) suppress matrix metalloproteinase (MMP) activity critical for extracellular matrix turnover associated with both physiologic and pathologic tissue remodeling. We demonstrate here that TIMP-2 abrogates angiogenic factor-induced endothelial cell proliferation in vitro and angiogenesis in vivo independent of MMP inhibition. These effects require α3β1 integrin-mediated binding of TIMP-2 to endothelial cells. Further, TIMP-2 induces a decrease in total protein tyrosine phosphatase (PTP) activity associated with β1 integrin subunits as well as dissociation of the phosphatase SHP-1 from β1. TIMP-2 treatment also results in a concomitant increase in PTP activity associated with tyrosine kinase receptors FGFR-1 and KDR. Our findings establish an unexpected, MMP-independent mechanism for TIMP-2 inhibition of endothelial cell proliferation in vitro and reveal an important component of the antiangiogenic effect of TIMP2 in vivo.