Extracellular proteolysis is an indispensable requirement for the formation of new blood vessels during neovascularization and is implicated in the generation of several angiogenic regulatory molecules. Anti-proteolytic agents have become attractive therapeutic strategies in diseases associated with excessive neovascularization. Annexin A2 (AnxA2) is an endothelial cell-surface receptor for the generation of active proteolytic factors, such as plasmin. Here, we show that AnxA2 is abundantly expressed in the neovascular tufts in a murine model of neovascularization. Exposure to hypoxic conditions results in elevation of AnxA2 and tissue plasminogen activator (tPA) in human retinal microvascular endothelial cells (RMVECs). We show that the hexapeptide competitive inhibitor LCKLSL, which targets the N-terminal tPA-binding site of AnxA2, binds efficiently to cell-surface AnxA2 compared with binding of the control peptide LGKLSL. Treatment with the competitive peptide inhibits the generation of plasmin and suppresses the VEGF-induced activity of tPA under hypoxic conditions. Application of the competitive peptide in two in vivo models of angiogenesis demonstrated suppression of the angiogenic responses, which was also associated with significant changes in the vascular sprouting. These results suggest that AnxA2-mediated plasmin generation is an important event in angiogenesis and is inhibited by a specific competitive peptide that inhibits the binding of tPA to AnxA2.