Increased brain expression of vascular endothelial growth factor (VEGF) is associated with neurological disease, brain injury, and blood–brain barrier (BBB) dysfunction. However, the specific effect of VEGF on the efflux transporter P-glycoprotein, a critical component of the BBB, is not known. Using isolated rat brain capillaries and in situ rat brain perfusion, we determined the effect of VEGF exposure on P-glycoprotein activity in vitro and in vivo. In isolated capillaries, VEGF acutely and reversibly decreased P-glycoprotein transport activity without decreasing transporter protein expression or opening tight junctions. This effect was blocked by inhibitors of the VEGF receptor flk-1 and Src kinase, but not by inhibitors of phosphatidylinositol-3-kinase or protein kinase C. VEGF also increased Tyr-14 phosphorylation of caveolin-1, and this was blocked by the Src inhibitor PP2. Pharmacological activation of Src kinase activity mimicked the effects of VEGF on P-glycoprotein activity and Tyr-14 phosphorylation of caveolin-1. In vivo, intracerebroventricular injection of VEGF increased brain distribution of P-glycoprotein substrates morphine and verapamil, but not the tight junction marker, sucrose; this effect was blocked by PP2. These findings indicate that VEGF decreases P-glycoprotein activity via activation of flk-1 and Src, and suggest Src-mediated phosphorylation of caveolin-1 may play a role in downregulation of P-glycoprotein activity. These findings also imply that P-glycoprotein activity is acutely diminished in pathological conditions associated with increased brain VEGF expression and that BBB VEGF/Src signaling could be targeted to acutely modulate P-glycoprotein activity and thus improve brain drug delivery.