The ability of cells to respond appropriately to changes in their environment requires integration and cross-talk between relevant signalling pathways. The vascular endothelial growth factor (VEGF) and angiopoietin families of ligands are key regulators of blood vessel formation. VEGF binds to receptor tyrosine kinases of the VEGF-receptor family to activate signalling pathways leading to endothelial migration, proliferation and survival whereas the angiopoietins interact with the Tie receptor tyrosine kinases to control vessel stability, survival and maturation. Here we show that VEGF can also activate the angiopoietin receptor Tie2. Activation of human endothelial cells with VEGF caused a four-fold stimulation of tyrosine phosphorylation of Tie2. This stimulation was not due to VEGF-induction of Tie2 ligands as soluble ligand binding domain of Tie2 failed to inhibit VEGF activation of the receptor. Immunoprecipitation analysis demonstrated no physical interaction between VEGF receptors and Tie2. However Tie2 does interact with the related receptor tyrosine kinase Tie1 and this receptor was found to be essential for VEGF activation of Tie2. VEGF stimulated proteolytic cleavage of Tie1 generating a truncated Tie1 intracellular domain. Similarly, phorbol ester also both stimulated Tie1 truncation and activated Tie2 phosphorylation. Inhibition of Tie1 cleavage with the metalloprotease inhibitor TAPI-2 suppressed VEGF- and phorbol ester-induced phosphorylation of Tie2. Truncated Tie1 formed in response to VEGF was also found to be tyrosine phosphorylated and this was independent of Tie2, though Tie2 could enhance Tie1 intracellular domain phosphorylation. Together these data demonstrate that VEGF activates Tie2 via a mechanism involving proteolytic cleavage of the associated tyrosine kinase Tie1 leading to trans-phosphorylation of Tie2. This novel mechanism of receptor tyrosine kinase activation is likely to be important in integrating signalling between two of the key receptor groups regulating angiogenesis.