Activation of the Rho GTPase Cdc42 has been shown in endothelial cell monolayers to prevent disassembly of inter-endothelial junctions and the increase in endothelial permeability. Here, we addressed the in vivo role of Cdc42 activity in mediating endothelial barrier protection in lungs by generating mice expressing the dominant active mutant V12Cdc42 protein in vascular endothelial cells targeted via the VE-cadherin promoter. These mice developed normally and exhibited constitutively-active GTP-bound Cdc42. The increase in lung vascular permeability and gain in tissue water content in response to i.p. lipopolysaccharide challenge (7 mg/kg) were markedly attenuated in the transgenic mice. To address the basis of the protective effect, we observed that expression of V12Cdc42 mutant in endothelial monolayers reduced the decrease in transendothelial electrical resistance, a measure of opening of inter-endothelial junctions; thus indicating that Cdc42 activity preserved junctional integrity. RhoA activity in V12Cdc42-expressing endothelial monolayers was reduced in comparison with untransfected cells, suggesting that activated Cdc42 functions by counteracting the canonical RhoA-mediated mechanism of endothelial hyperpermeability. Therefore, Cdc42 activity of microvessel endothelial cells is a critical determinant of junctional barrier restrictiveness, and may represent a means of therapeutically modulating increased lung vascular permeability and edema formation.