Vascular endothelial growth factor (VEGF) is a strong angiogenic mitogen and plays important roles in angiogenesis under various pathophysiological conditions. The in vivo angiogenic activity of secreted VEGF may be regulated by extracellular inhibitors, because it is also produced in avascular tissues such as the cartilage. To seek the binding inhibitors against VEGF, we screened the chondrocyte cDNA library by a yeast two‐hybrid system by using VEGF₁₆₅ as bait and identified connective tissue growth factor (CTGF) as a candidate. The complex formation of VEGF₁₆₅ with CTGF was first established by immunoprecipitation from the cells overexpressing both binding partners. A competitive affinity‐binding assay also demonstrated that CTGF binds specifically to VEGF₁₆₅ with two classes of binding sites (Kd = 26 ± 11 nM and 125 ± 38 nM). Binding assay using deletion mutants of CTGF indicated that the thrombospondin type‐1 repeat (TSP‐1) domain of CTGF binds to the exon 7‐coded region of VEGF₁₆₅ and that the COOH‐terminal domain preserves the affinity to both VEGF₁₆₅ and VEGF₁₂₁. The interaction of VEGF₁₆₅ with CTGF inhibited the binding of VEGF₁₆₅ to the endothelial cells and the immobilized KDR/IgG Fc; that is, a recombinant protein for VEGF₁₆₅ receptor. By in vitro tube formation assay of endothelial cells, full‐length CTGF and the deletion mutant possessing the TSP‐1 domain inhibited VEGF₁₆₅‐induced angiogenesis significantly in the complex form. This antiangiogenic activity of CTGF was demonstrated further by in vivo angiogenesis assay by using Matrigel injection model in mice. These data demonstrate for the first time that VEGF₁₆₅ binds to CTGF through a protein‐to‐protein interaction and suggest that the angiogenic activity of VEGF₁₆₅ is regulated negatively by CTGF in the extracellular environment.