Transendothelial leukocyte migration is a major aspect of the innate immune response. It is essential in repair and regeneration of damaged tissues and is regulated by multiple cell adhesion molecules (CAMs) including members of the immunoglobulin (Ig) superfamily. Activated leukocyte cell adhesion molecule (ALCAM/CD166) is an Ig CAM expressed by activated monocytes and endothelial cells. Hitherto, the functional relevance of ALCAM expression by endothelial cells and activated monocytes remained unknown. In this report, we demonstrate soluble recombinant human ALCAM significantly inhibited the rate of transendothelial migration of monocyte cell lines. Direct involvement of ALCAM in transendothelial migration was evident from the robust inhibition of this process by ALCAM blocking antibodies. However, soluble recombinant ALCAM had no impact on monocyte migration or adhesion to endothelium. Localization of ALCAM specifically at cell–cell junctions in endothelial cells supported its role in transendothelial migration. This study is the first to localize ALCAM to endothelial cell junctions and demonstrate a functional relevance for co-expression of ALCAM by activated monocytes and endothelial cells.