Tumors initiate angiogenesis primarily by secreting vascular endothelial growth factor (VEGF-A164). The first new vessels to form are greatly enlarged, pericyte-poor sinusoids, called mother vessels (MV), that originate from preexisting venules. We postulated that the venular enlargement necessary to form MV would require a selective degradation of their basement membranes, rigid structures that resist vascular expansion. To identify the specific proteases responsible for MV formation, we induced angiogenesis in mouse tissues with an adenoviral vector expressing VEGF-A164 (Ad-VEGF-A 164) or with VEGF-A-secreting TA3/St mammary tumors. We found that MV formation resulted from greatly increased activity of cathepsins (B>Sm>L) in venules transitioning into MV, as well as from a reciprocal decrease in the expression of several cysteine protease inhibitors (CPI), stefin A and cystatins B and C, by these same venules. Using a fluorescence probe that selectively binds cellular sites of cathepsin protease activity in vivo, we showed that increased cathepsin activity was localized exclusively to perivenular cells, not to venule endothelial cells. CPI strikingly inhibited angiogenesis in the Matrigel assay, and Ad-VEGF-A164-induced angiogenesis was reduced by ∼50% in cathepsin B-null mice. Thus, VEGF-A, whether expressed by interstitial cells infected with an adenoviral vector or by tumor cells, upsets the normal cathepsin-CPI balance in nearby venules, leading to degradation of their basement membranes, an important first step in angiogenesis.