Increased vascular permeability associated with retinal vascular leakage is known to occur in patients with diabetes, and contributes to endothelial barrier dysfunction. The purpose of this study was to examine the effect of pigment epithelium-derived factor (PEDF) on signaling cascade in porcine retinal endothelial cells (PREC) related to permeability and angiogenesis induced by vascular endothelial growth factor (VEGF)-and interleukin-1beta (IL-1beta). PREC were exposed to VEGF, IL-1beta and PEDF at different concentrations, and in vitro permeability was assessed by solute flux assay using 70-kDa RITC-dextran. Angiogenic assays such as proliferation, migration and tube formation were determined by MTT, wound-scratch method and on-gel assay system respectively. To explore the signaling pathways behind VEGF-and IL-1beta-induced PREC permeability, an inhibitor assay was carried out using PP2, a Src kinase inhibitor. Further, Src activity was assessed by transient transfection assay using constitutively active (CA) and dominant negative (DN) Src mutants. We report that VEGF-and IL-1beta-stimulates permeability, in a dose and time-dependent manner and PEDF inhibits the VEGF-and IL-1beta-induced PREC permeability. In addition, PEDF inhibits the VEGF-and IL-1beta-induced endothelial cell proliferation, migration and tube formation. In addition, overexpression of DN Src blocked both VEGF-and IL-1beta-stimulation of permeability, proliferation and migration, while overexpression of CA Src overpowers the inhibitory action of PEDF on permeability, proliferation and migration. These results demonstrate that PEDF may inhibit the VEGF-and IL-1beta-induced permeability and angiogenesis via Src-dependent pathway.