Diminished bioavailability of nitric oxide is a hallmark of endothelial dysfunction and is associated with a broad spectrum of vascular disorders such as impaired angiogenesis. Because Rac1, a Rho family member, mediates cellular motility and generation of reactive oxygen species, it could be involved in the regulation of endothelial nitric oxide production. However, the pathophysiological consequences of postnatal endothelial Rac1 deletion on endothelial function have not been determined. We generated endothelial-specific Rac1 haploinsufficient mice (EC-Rac1^+/−) using Cre-loxP technology. The EC-Rac1^+/− mice have decreased expression and activity of endothelial nitric oxide synthase (eNOS), impaired endothelium-dependent vasorelaxation, and mild hypertension compared with control (Rac1^+/flox) mice. Hind limb ischemia model and aortic capillary sprouting assay showed that eNOS activity and angiogenesis was impaired in EC-Rac1^+/− mice. Indeed, Rac1 promotes eNOS gene transcription through p21-activated kinase but not NADPH oxidase, increases eNOS mRNA stability, and enhances eNOS activity by promoting endothelial uptake of l-arginine. These findings indicate that endothelial Rac1 is essential for endothelium-dependent vasomotor response and ischemia-induced angiogenesis. These effects of Rac1 on endothelial function are largely due to the upregulation of eNOS through multiple mechanisms that are mediated, in part, by p21-activated kinase. Therapeutic strategies to enhance Rac1 function, therefore, may be important for preventing endothelial dysfunction.