Endostatin, the C-terminal fragment of collagen XVIII, is a potent angiogenesis inhibitor. At present, there are a large number of research papers on endostatin. However, the action mechanism of endostatin is still a matter of ongoing discussion. The objective of this review is to elucidate its origin and elementary structure, and to discuss its structure basis of activity and action mechanisms based on the latest research. Furthermore, some published studies reporting the antiangiogenic effects of endostatin-derived peptides were also reviewed. It is proposed that the amino acid sequence of endostatin contains both angiosuppressive and angiostimulatory domains. Short endostatin fragments may be exploited as a new angiogenesis inhibitor for therapeutic applications, in substitution of the full length endostatin. These studies on endostatin fragments also shed light on our understanding of the molecular action mechanisms of endostatin.