Lysophosphatidic acid (LPA) is emerging as an angiogenic factor, because knockdown of the enzyme that produces it (autotaxin, also known as ENPP2) and its receptors cause severe developmental vascular defects in both mice and fish. In addition, overexpression of autotaxin in mice causes similar vascular defects, indicating that the extracellular amount of LPA must be tightly regulated. Here, we focused on an LPA-degrading enzyme, lipid phosphate phosphatase 3 (LPP3, also known as PPAP2B), and showed that LPP3 was localized in specific cell–cell contact sites of endothelial cells and suppresses LPA signalling through the LPA₆ receptor (also known as LPAR6). In HEK293 cells, overexpression of LPP3 dramatically suppressed activation of LPA₆. In human umbilical vein endothelial cells (HUVECs), LPA induced actin stress fibre formation through LPA₆, which was substantially upregulated by LPP3 knockdown. LPP3 was localized to cell–cell contact sites and was missing in non-contact sites to which LPA-induced actin stress fibre formation mediated by LPA₆ was restricted. Interestingly, the expression of LPP3 in HUVECs was dramatically increased after forskolin treatment in a process involving Notch signalling. These results indicate that LPP3 regulates and localizes LPA signalling in endothelial cells, thereby stabilizing vessels through Notch signalling for proper vasculature.