Abstract Aims Receptor-type vascular endothelial protein tyrosine phosphatase (VE-PTP) dephosphorylates Tie-2 as well as CD31, VE-cadherin, and vascular endothelial growth factor receptor 2 (VEGFR2). The latter form a signal transduction complex that mediates the endothelial cell response to shear stress, including the activation of the endothelial nitric oxide (NO) synthase (eNOS). As VE-PTP expression is increased in diabetes, we investigated the consequences of VE-PTP inhibition (using AKB-9778) on blood pressure in diabetic patients and the role of VE-PTP in the regulation of eNOS activity and vascular reactivity. Methods and results In diabetic patients AKB-9778 significantly lowered systolic and diastolic blood pressure. This could be linked to elevated NO production, as AKB increased NO generation by cultured endothelial cells and elicited the NOS inhibitor-sensitive relaxation of endothelium-intact rings of mouse aorta. At the molecular level, VE-PTP inhibition increased the phosphorylation of eNOS on Tyr81 and Ser1177 (human sequence). The PIEZO1 activator Yoda1, which was used to mimic the response to shear stress, also increased eNOS Tyr81 phosphorylation, an effect that was enhanced by VE-PTP inhibition. Two kinases, i.e. abelson-tyrosine protein kinase (ABL)1 and Src were identified as eNOS Tyr81 kinases as their inhibition and down-regulation significantly reduced the basal and Yoda1-induced tyrosine phosphorylation and activity of eNOS. VE-PTP, on the other hand, formed a complex with eNOS in endothelial cells and directly dephosphorylated eNOS Tyr81 in vitro. Finally, phosphorylation of eNOS on Tyr80 (murine sequence) was found to be reduced in diabetic mice and diabetes-induced endothelial dysfunction (isolated aortic rings) was blunted by VE-PTP inhibition. Conclusions VE-PTP inhibition enhances eNOS activity to improve endothelial function and decrease blood pressure indirectly, through the activation of Tie-2 and the CD31/VE-cadherin/VEGFR2 complex, and directly by dephosphorylating eNOS Tyr81. VE-PTP inhibition, therefore, represents an attractive novel therapeutic option for diabetes-induced endothelial dysfunction and hypertension.