Increased arginase activity contributes to endothelial dysfunction by competition for l-arginine substrate and reciprocal regulation of nitric oxide synthase (NOS). The rapid increase in arginase activity in human aortic endothelial cells exposed to oxidized low-density lipoprotein (OxLDL) is consistent with post-translational modification or subcellular trafficking. To test the hypotheses that OxLDL triggers reverse translocation of mitochondrial arginase 2 (Arg2) to cytosol and Arg2 activation, and that this process is dependent on mitochondrial processing peptidase, lectin-like OxLDL receptor-1 receptor, and rho kinase. OxLDL-triggered translocation of Arg2 from mitochondria to cytosol in human aortic endothelial cells and in murine aortic intima with a concomitant rise in arginase activity. All of these changes were abolished by inhibition of mitochondrial processing peptidase or by its siRNA-mediated knockdown. Rho kinase inhibition and the absence of the lectin-like OxLDL receptor-1 in knockout mice also ablated translocation. Aminoterminal sequencing of Arg2 revealed 2 candidate mitochondrial targeting sequences, and deletion of either of these confined Arg2 to the cytoplasm. Inhibitors of mitochondrial processing peptidase or lectin-like OxLDL receptor-1 knockout attenuated OxLDL-mediated decrements in endothelial-specific NO production and increases in superoxide generation. Finally, Arg2(-/-) mice bred on an ApoE(-/-) background showed reduced plaque load, reduced reactive oxygen species production, enhanced NO, and improved endothelial function when compared with ApoE(-/-) controls. These data demonstrate dual distribution of Arg2, a protein with an unambiguous mitochondrial targeting sequence, in mammalian cells, and its reverse translocation to cytoplasm by alterations in the extracellular milieu. This novel molecular mechanism drives OxLDL-mediated arginase activation, endothelial NOS uncoupling, endothelial dysfunction, and atherogenesis.