Phospholipase C-epsilon (PLC-epsilon) is a unique PLC isoform that can be regulated by multiple signaling inputs from both Ras family GTPases and heterotrimeric G proteins and has primary sites of expression in the heart and lung. Whereas the role of PLC-epsilon in cardiac function and pathology has been documented, its relevance in acute lung injury (ALI) is unclear. We used PLC-epsilon(-/-) mice to address the role of PLC-epsilon in regulating lung vascular inflammation and injury in an aerosolized bacterial LPS inhalation mouse model of ALI. PLC-epsilon(-/-) mice showed a marked decrease in LPS-induced proinflammatory mediators (ICAM-1, VCAM-1, TNF-alpha, IL-1 beta, IL-6, macrophage inflammatory protein 2, keratinocyte-derived cytokine, monocyte chemoattractant protein 1, and granulocyte-macrophage colony-stimulating factor), lung neutrophil infiltration and microvascular leakage, and loss of VE-cadherin compared with PLC-epsilon(+/+) mice. These data identify PLC-epsilon as a critical determinant of proinflammatory and leaky phenotype of the lung. To test the possibility that PLC-epsilon activity in endothelial cells (EC) could contribute to ALI, we determined its role in EC inflammation and barrier disruption. RNAi knockdown of PLC-epsilon inhibited NF-kappa B activity in response to diverse proinflammatory stimuli, thrombin, LPS, TNF-alpha, and the nonreceptor agonist phorbol 13-myristate 12-acetate (phorbol esters) in EC. Depletion of PLC-epsilon also inhibited thrombin-induced expression of NF-kappa B target gene, VCAM-1. Importantly, PLC-epsilon knockdown also protected against thrombin-induced EC barrier disruption by inhibiting the loss of VE-cadherin at adherens junctions and formation of actin stress fibers. These data identify PLC-epsilon as a novel regulator of EC inflammation and permeability and show a hitherto unknown role of PLC-epsilon in the pathogenesis of ALI.