The movement of leukocytes across endothelium [referred to as diapedesis or transendothelial migration (TEM)] is a critical step in the inflammatory process. Recently, it was demonstrated that treatment of endothelial cells and monocytes with antibodies against poliovirus receptor (PVR; CD155) and DNAX-associated molecule-1 (DNAM-1; CD226) arrested monocytes over endothelial junctions and prevented TEM, suggesting that these molecules are involved in diapedesis. However, nothing was known about the mechanism by which PVR and DNAM-1 work in TEM. Herein, we show that, similar to endothelial PECAM interacting with leukocyte PECAM, activation of endothelial PVR with anti-PVR antibodies or interaction with its ligand, DNAM-1, results in recruitment of the tyrosine phosphatase Shp-2, and this process is dependent on Src kinases. Furthermore, differential and sequential treatment with blocking antibodies directed against PVR, DNAM-1, PECAM, and CD99 showed that endothelial PVR and monocyte DNAM-1 interact at and regulate a step between those regulated by PECAM and CD99. Further studies demonstrate that PVR resides in the recently identified lateral border recycling compartment, similar to PECAM and CD99. These findings suggest that the localization of adhesion/signaling molecules to the lateral border recycling compartment and the recruitment of Shp-2 may be common mechanisms for the regulation of TEM by endothelial cells.