The endothelium is required for maintenance of vascular integrity and homeostasis during vascular development and in adulthood. However, little is known about the coordinated interplay between transcription factors and signaling molecules that regulate endothelial cell-dependent transcriptional events. Vascular endothelial zinc finger-1 (Vezf1) is a zinc finger-containing transcription factor that is specifically expressed within the endothelium during vascular development. We have previously shown that Vezf1 potently activates transcription of the endothelin-1 promoter. We now report the identification of p68RacGAP, a novel Vezf1-interacting 68-kDa RhoGAP domain-containing protein. p68RacGAP mRNA is highly expressed in vascular endothelial cells by Northern blot analysis, and immunohistochemical staining of adult mouse tissues identified p68RacGAP in endothelial cells, vascular smooth muscle cells, and epithelial cells in vivo. Rac1 and Vezf1 both bind avidly to p68RacGAP, suggesting that p68RacGAP is not only a GTPase-activating protein for Rac1 but that p68RacGAP may also be part of the protein complex that binds to and modulates Vezf1 transcriptional activity. Functionally p68RacGAP specifically activates the GTPase activity of Rac1 in vivo but not Cdc42 or RhoA. In addition, p68RacGAP potently inhibits Vezf1/DB1-mediated transcriptional activation of the human endothelin-1 promoter and modulates endothelial cell capillary tube formation. Taken together, these data suggest that p68RacGAP is a multifunctional regulatory protein that has a Rac1-specific GTPase-activating activity, regulates transcriptional activity of the endothelin-1 promoter, and is involved in the signal transduction pathway that regulates endothelial cell capillary tube formation during angiogenesis.