Excessive neutrophil elastase (NE) activity and altered vascular endothelial growth factor (VEGF) signaling have independently been implicated in the development and progression of pulmonary emphysema. In the present study, we investigated the potential link between NE and VEGF. We noted that VEGF₁₆₅ is a substrate for NE. Digestion of purified VEGF₁₆₅ with NE generated a partially degraded disulfide linked fragment of VEGF. Mass spectrometric analysis revealed that NE likely cleaves VEGF₁₆₅ at both the N- and C-termini to produce VEGF fragment chains ~5 kDa reduced in size. NE treatment of VEGF-laden endothelial cell cultures and smooth muscle cells endogenously expressing VEGF generated VEGF fragments similar to those observed with purified VEGF₁₆₅. NE-generated VEGF fragment showed significantly reduced binding to VEGF receptor 2 and heparin, yet retained the ability to bind to VEGF receptor 1. Interestingly, VEGF fragment showed altered signaling in pulmonary artery endothelial cells compared to intact VEGF165. Specifically, treatment with VEGF fragment did not activate extracellular-regulated kinases 1 and 2 (ERK1/2), yet resulted in enhanced activation of Akt. Treatment of monocyte/macrophage RAW264.7 cells with VEGF fragment, on the other hand, led to both Akt and ERK1/2 activation, increased VEGFR1 expression and stimulated chemotaxis. These findings suggest that the tissue response to NE-mediated injury might involve the generation of diffusible VEGF fragments that stimulate inflammatory cell recruitment and activation via VEGF receptor 1.