Vascular endothelial growth factor A (VEGF‐A)‐induced signaling through VEGF receptor 2 (VEGFR2) regulates both physiological and pathological angiogenesis in mammals. However, the temporal and spatial mechanism underlying VEGFR2‐mediated intracellular signaling is not clear. Here, we define a pathway for VEGFR2 trafficking and proteolysis that regulates VEGF‐A‐stimulated signaling and endothelial cell migration. Ligand‐stimulated VEGFR2 activation and ubiquitination preceded proteolysis and cytoplasmic domain removal associated with endosomes. A soluble VEGFR2 cytoplasmic domain fragment displayed tyrosine phosphorylation and activation of downstream intracellular signaling. Perturbation of endocytosis by the depletion of either clathrin heavy chain or an ESCRT‐0 subunit caused differential effects on ligand‐stimulated VEGFR2 proteolysis and signaling. This novel VEGFR2 proteolysis was blocked by the inhibitors of 26S proteasome activity. Inhibition of proteasome activity prolonged VEGF‐A‐induced intracellular signaling to c‐Akt and endothelial nitric oxide synthase (eNOS). VEGF‐A‐stimulated endothelial cell migration was dependent on VEGFR2 and VEGFR tyrosine kinase activity. Inhibition of proteasome activity in this assay stimulated VEGF‐A‐mediated endothelial cell migration. VEGFR2 endocytosis, ubiquitination and proteolysis could also be stimulated by a protein kinase C‐dependent pathway. Thus, removal of the VEGFR2 carboxyl terminus linked to phosphorylation, ubiquitination and trafficking is necessary for VEGF‐stimulated endothelial signaling and cell migration.