Excessive angiogenesis is involved in many human diseases, and inhibiting angiogenesis is an important area of drug development. There have been conflicting reports as to whether decorin could function as an angiogenic inhibitor when used as an extracellular soluble factor. In this study, we demonstrated that not only purified decorin but also the 26-residue leucine-rich repeat 5 (LRR5) of decorin core protein functions as angiogenesis inhibitor by inhibiting both vascular endothelial growth factor (VEGF) and basic fibroblast growth factor-induced angiogenesis. Peptide LRR5 inhibited angiogenesis through multiple mechanisms, including inhibiting VEGF-stimulated endothelial cell (EC) migration, tube formation on Matrigel, cell attachment to fibronectin, as well as induction of EC apoptosis without significantly affecting their proliferation. We further demonstrated that different subregions of LRR5 inhibited different aspects of angiogenesis, with the middle region (LRR5M, 12 residues) inhibiting endothelial cell tube formation up to 1000 times more potently than LRR5. Although the C-terminal region (LRR5C) potently inhibited VEGF-stimulated endothelial cell migration, the N-terminal region (LRR5N) is as active as LRR5 in inhibiting endothelial cell attachment to fibronectin. Although both LRR5M and LRR5N induced EC apoptosis dose-dependently similar to LRR5 through a caspase-dependent pathway, LRR5C has no such function. We further showed that the inhibition of tube formation by LRR5 and LRR5M is linked with their ability to suppress VEGF-induced focal adhesion kinase phosphorylation and the assembly of focal adhesions and actin stress fibers in ECs, but not their ability to interfere with endothelial cell attachment to the matrix. Circular dichroism studies revealed that LRR5 undergoes an inter-conversion between 3(10) helix and beta-sheet structure in solution, a characteristic potentially important for its anti-angiogenic activity. Peptide LRR5 and its derivatives are therefore novel angiogenesis inhibitors that may serve as prototypes for further development into anti-angiogenic drugs.