Pigment epithelium-derived factor (PEDF) is a potent multifunctional protein that inhibits angiogenesis and has neurogenic and neuroprotective properties. Since the wet form of age-related macular degeneration is characterized by choroidal neovascularization (CNV), PEDF would be an ideal candidate to inhibit CNV and support retinal pigment epithelial (RPE) cells. However, its short half-life has precluded its clinical use. To deliver PEDF to the subretinal space, we transfected RPE cells with the PEDF gene using the Sleeping Beauty transposon system. Transfected cells expressed and secreted biologically active recombinant PEDF (rPEDF). In cultures of human umbilical vein endothelial cells, rPEDF reduced VEGF-induced cumulative sprouting by ≥47%, decreased migration by 77%, and increased rate of apoptosis at least 3.4 times. rPEDF induced neurite outgrowth in neuroblastoma cells and protected ganglion and photoreceptor cells in organotypic retinal cultures. In a rat model of CNV, subretinal transplantation of PEDF-transfected cells led to a reduction of the CNV area by 48% 14 days after transplantation and decreased clinical significant lesions by 55% and 40% after 7 and 14 days, respectively. We showed that transplantation of pigment epithelial cells overexpressing PEDF can restore a permissive subretinal environment for RPE and photoreceptor maintenance, while inhibiting choroidal blood vessel growth.