The molecular mechanisms of endothelial nitric oxide synthase (eNOS) regulation of microvascular permeability remain unresolved. Agonist-induced internalization may have a role in this process. We demonstrate here that internalization of eNOS is required to deliver NO to subcellular locations to increase endothelial monolayer permeability to macromolecules. Using dominant-negative mutants of dynamin-2 (dyn2K44A) and caveolin-1 (cav1Y14F), we show that anchoring eNOS-containing caveolae to plasma membrane inhibits hyperpermeability induced by platelet-activating factor (PAF), VEGF in ECV-CD8eNOSGFP (ECV-304 transfected cells) and postcapillary venular endothelial cells (CVEC). We also observed that anchoring caveolar eNOS to the plasma membrane uncouples eNOS phosphorylation at Ser-1177 from NO production. This dissociation occurred in a mutant- and cell-dependent way. PAF induced Ser-1177-eNOS phosphorylation in ECV-CD8eNOSGFP and CVEC transfected with dyn2K44A, but it dephosphorylated eNOS at Ser-1177 in CVEC transfected with cav1Y14F. Interestingly, dyn2K44A eliminated NO production, whereas cav1Y14F caused reduction in NO production in CVEC. NO production by cav1Y14F-transfected CVEC occurred in caveolae bound to the plasma membrane, and was ineffective in causing an increase in permeability. Our study demonstrates that eNOS internalization is required for agonist-induced hyperpermeability, and suggests that a mechanism by which eNOS is activated by phosphorylation at the plasma membrane and its endocytosis is required to deliver NO to subcellular targets to cause hyperpermeability.