Angiogenesis plays a key role in various physiologic and pathologic conditions, including tumor growth. Drm/gremlin, a member the Dan family of bone morphogenic protein (BMP) antagonists, is commonly thought to affect different processes during growth, differentiation, and development by heterodimerizing various BMPs. Here, we identify Drm/gremlin as a novel proangiogenic factor expressed by endothelium. Indeed, Drm/gremlin was purified to homogeneity from the conditioned medium of transformed endothelial cells using an endothelial-cell sprouting assay to follow protein isolation. Accordingly, recombinant Drm/gremlin stimulates endothelial-cell migration and invasion in fibrin and collagen gels, binds with high affinity to various endothelial cell types, and triggers tyrosine phosphorylation of intracellular signaling proteins. Also, Drm/gremlin induces neovascularization in the chick embryo chorioallantoic membrane. BMP4 does not affect Drm/gremlin interaction with endothelium, and both molecules exert a proangiogenic activity in vitro and in vivo when administered alone or in combination. Finally, Drm/gremlin is produced by the stroma of human tumor xenografts in nude mice, and it is highly expressed in endothelial cells of human lung tumor vasculature when compared with non-neoplastic lung. Our observations point to a novel, previously unrecognized capacity of Drm/gremlin to interact directly with target endothelial cells and to modulate angiogenesis.