Inhibiting vascular endothelial growth factor (VEGF) is a therapeutic option in diabetic microangiopathy. However, VEGF is needed at physiological concentrations to maintain glomerular integrity; complete VEGF blockade has deleterious effects on glomerular structure and function. Anti-VEGF therapy in diabetes raises the challenge of reducing VEGF-induced pathology without accelerating endothelial cell injury. Heparan sulfate (HS) can act as a co-receptor for VEGF. Calcium dobesilate (CaD) is a small molecule with vasoprotective properties that has been used for the treatment of diabetic microangiopathy. Preliminary evidence suggests that CaD interferes with HS binding sites of fibroblast growth factor. We therefore tested the hypotheses that (1) CaD inhibits VEGF signaling in endothelial cells, (2) that this effect is mediated via interference between CaD and HS, and (3) that CaD ameliorates diabetic nephropathy in a streptozotocin-induced diabetic mouse model by VEGF inhibition. We found that CaD significantly inhibited VEGF165-induced endothelial cell migration, proliferation, and permeability. CaD significantly inhibited VEGF165-induced phosphorylation of VEGFR-2 and suppressed the activity of VEGFR-2 mediated signaling cascades. The effects of CaD in vitro were abrogated by heparin, suggesting the involvement of heparin-like domain in the interaction with CaD. In addition, VEGF121, an isoform which does not bind to heparin, was not inhibited by CaD. By applying proximity ligation assays to endothelial cells, we show inhibition of interaction in situ between HS and VEGF and between VEGF and VEGFR-2. Moreover, CaD reduced VEGF signaling in diabetic kidneys and ameliorated diabetic nephropathy and neuropathy, suggesting CaD as a VEGF inhibitor without the negative effects of complete VEGF blockade and therefore could be useful as a strategy in treating diabetic nephropathy.