p120-catenin is a cytoplasmic binding partner of cadherins and functions as a set point for cadherin expression by preventing cadherin endocytosis, and degradation. p120 is known to regulate cell motility and invasiveness by inhibiting RhoA activity. However, the relationship between these functions of p120 is not understood. Here, we provide evidence that p120 functions as part of a plasma membrane retention mechanism for VE-cadherin by preventing the recruitment of VE-cadherin into membrane domains enriched in components of the endocytic machinery, including clathrin and the adaptor complex AP-2. The mechanism by which p120 regulates VE-cadherin entry into endocytic compartments is dependent on p120's interaction with the cadherin juxtamembrane domain, but occurs independently of p120's prevention of Rho GTPase activity. These findings clarify the mechanism for p120's function in stabilizing VE-cadherin at the plasma membrane and demonstrate a novel role for p120 in modulating the availability of cadherins for entry into a clathrin-dependent endocytic pathway.