Angiogenesis, the formation of new blood vessels from a pre-existing vasculature, is crucial during development and for many diseases including cancer. Despite tremendous progress in the understanding of the angiogenic process, many aspects are still not fully elucidated. Several attempts have been made to identify novel genes involved in endothelial cell biology and angiogenesis. Here we focused on Pald1, a recently identified, vascular-enriched gene encoding paladin. Our in vitro studies indicate that paladin is a lipid phosphatase catalyzing dephosphorylation of phosphatidylinositol phosphates, a process essential for endocytosis and intracellular vesicle trafficking. We confirmed paladin’s vascular expression pattern and revealed a shift from a broad endothelial cell expression during development to an arterial mural cell-restricted expression in several vascular beds in adult mice. Paladin expression in the lung, however, was not restricted to the vasculature, but was also observed in pneumocytes and myofibroblasts. Lungs of female, but not male, Pald1 null mice displayed an obstructive lung phenotype with increased alveolar air sacs that were already apparent early in the alveolarization process. Only endothelial cells, but not other main lung cell types, were affected by loss of paladin. Endothelial cell number was reduced in 4-week old mice, possibly due to increased endothelial turnover in Pald1 deficient lungs. Vascular defects were also found in the retina. Loss of paladin led to reduced retinal vascular outgrowth accompanied by a hyperdense and hypersprouting vascular front. Downstream signaling of the major angiogenic driver, vascular endothelial growth factor receptor 2 (VEGFR2) was sustained in Pald1 null mice, and VEGFR2 degradation was impaired. Furthermore, paladin inhibited endothelial cell junction stability and loss of paladin led to reduced vascular permeability. Whether the differences in VEGFR2 signaling and adherens junction stability are connected remains to be fully explored. The newly identified lipid phosphatase activity of paladin and its specific effects on VEGFR2 signaling and adherens junction stability indicate that paladin may be controlling the endocytic pathway.