The ability of an adenoviral vector expressing the melanoma differentiation-associated gene-7 (Ad-mda7) to mediate inhibition of vascular endothelial growth factor (VEGF) has recently been reported. However, the molecular mechanism by which Ad-mda7 inhibits VEGF is unknown. In an attempt to elucidate this mechanism, we studied the effects of Ad-mda7 on VEGF expression using human prostate cancer cells as a model. We found that Ad-mda7 treatment of prostate cancer cells (LNCaP and DU145) in vitro resulted in a significant (P < 0.05) inhibition of VEGF expression. Analysis of the VEGF signaling pathway showed that Ad-mda7 inhibited c-Src kinase activity and abrogated STAT-3 binding to the VEGF promoter. Correlating with these observations were reductions in VEGF mRNA and protein levels in Ad-mda7-treated cells. Furthermore, Ad-mda7 inhibited VEGF in Src(+/+) but not in Src(-/-) mouse embryo fibroblasts. These results showed that Ad-mda7 inhibited VEGF by inhibiting the Src signaling pathway. Finally, conditioned medium from Ad-mda7-treated tumor cells containing reduced VEGF inhibited VEGF receptor signaling, resulting in reduced endothelial cell proliferation and apoptosis. Our results provide evidence for the mechanism by which Ad-mda7 inhibits VEGF in tumor cells and of the effects of this VEGF inhibition on endothelial cell proliferation, a requirement for angiogenesis. Our findings demonstrate that MDA-7 protein, in addition to inhibiting tumor angiogenesis directly, inhibits angiogenesis indirectly by inhibiting VEGF production by tumor cells.