Platelet endothelial cell adhesion molecule-1 (PECAM-1/CD31) regulates a variety of endothelial and immune cell biological responses. PECAM-1-null mice exhibit prolonged and increased permeability after inflammatory insults. We observed that in PECAM-1-null endothelial cells (ECs), beta-catenin remained tyrosine phosphorylated, coinciding with a sustained increase in permeability. Src homology 2 domain containing phosphatase 2 (SHP-2) association with beta-catenin was diminished in PECAM-1-null ECs, suggesting that lack of PECAM-1 inhibits the ability of this adherens junction component to become dephosphorylated, promoting a sustained increase in permeability. beta-Catenin/Glycogen synthase kinase 3 (GSK-3beta) association and beta-catenin serine phosphorylation levels were increased and beta-catenin expression levels were reduced in PECAM-1-null ECs. Glycogen synthase kinase 3 (GSK-3beta) serine phosphorylation (inactivation) was blunted in PECAM-1-null ECs after histamine treatment or shear stress. Our data suggest that PECAM-1 serves as a critical dynamic regulator of endothelial barrier permeability. On stimulation by a vasoactive substance or shear stress, PECAM-1 became tyrosine phosphorylated, enabling recruitment of SHP-2 and tyrosine-phosphorylated beta-catenin to its cytoplasmic domain, facilitating dephosphorylation of beta-catenin, and allowing reconstitution of adherens junctions. In addition, PECAM-1 modulated the levels of beta-catenin by regulating the activity of GSK-3beta, which in turn affected the serine phosphorylation of beta-catenin and its proteosomal degradation, affecting the ability of the cell to reform adherens junctions in a timely fashion.