Endothelial cell (EC) activation and vascular injury are hallmark features of acute lung injury (ALI) and acute respiratory distress syndrome (ARDS). Caveolin-1 (Cav-1) is highly expressed in pulmonary microvascular ECs and plays a key role in maintaining vascular homeostasis. The aim of this study was to determine if the lung inflammatory response to Escherichia coli lipopolysaccharide (LPS) promotes priming of ECs via Cav-1 depletion and if this contributes to the onset of pulmonary vascular remodeling. To test the hypothesis that depletion of Cav-1 primes ECs to respond to profibrotic signals, C57BL6 wild-type (WT) mice (Tie2.Cre⁻;Cav1^fl/fl) were exposed to nebulized LPS (10 mg; 1 h daily for 4 days) and compared with EC-specific Cav1^−/− (Tie2.Cre⁺;Cav1^fl/fl). After 96 h of LPS exposure, total lung Cav-1 and bone morphogenetic protein receptor type II (BMPRII) expression were reduced in WT mice. Moreover, plasma albumin leakage, infiltration of immune cells, and levels of IL-6/IL-6R and transforming growth factor-β (TGF-β) were elevated in both LPS-treated WT and EC-Cav1^−/− mice. Finally, EC-Cav1^−/− mice exhibited a modest increase in microvascular thickness basally and even more so on exposure to LPS (96 h). EC-Cav1^−/− mice and LPS-treated WT mice exhibited reduced BMPRII expression and endothelial nitric oxide synthase uncoupling, which along with increased TGF-β promoted TGFβRI-dependent SMAD-2/3 phosphorylation. Finally, human lung sections from patients with ARDS displayed reduced EC Cav-1 expression, elevated TGF-β levels, and severe pulmonary vascular remodeling. Thus EC Cav-1 depletion, oxidative stress-mediated reduction in BMPRII expression, and enhanced TGF-β-driven SMAD-2/3 signaling promote pulmonary vascular remodeling in inflamed lungs.