Endogenously produced nitric oxide synthase inhibitor, asymmetric methylarginine (ADMA) is associated with vascular dysfunction and endothelial leakage. We studied the role of ADMA, and the enzymes metabolizing it, dimethylarginine dimethylaminohydrolases (DDAH) in the regulation of endothelial barrier function in pulmonary macrovascular and microvascular cells in vitro and in lungs of genetically modified heterozygous DDAHI knockout mice in vivo. We show that ADMA increases pulmonary endothelial permeability in vitro and in in vivo and that this effect is mediated by nitric oxide (NO) acting via protein kinase G (PKG) and independent of reactive oxygen species formation. ADMA-induced remodeling of actin cytoskeleton and intercellular adherens junctions results from a decrease in PKG-mediated phosphorylation of vasodilator-stimulated phosphoprotein (VASP) and a subsequent down-regulation of Rac1 activity. The effects of ADMA on endothelial permeability, Rac1 activation and VASP phosphorylation are prevented by overexpression of active DDAHI and DDAHII, whereas inactive DDAH mutants have no effect. These findings demonstrate for the first time that ADMA metabolism critically determines pulmonary endothelial barrier function by modulating Rac1-mediated remodeling of the actin cytoskeleton and intercellular junctions.