Cell signalling governs cellular behaviour and is therefore subject to tight spatiotemporal regulation. Signalling output is modulated by specialized cell membranes and vesicles which contain unique combinations of lipids and proteins. The phosphatidylinositol 4,5‐bisphosphate (PI(4,5)P₂), an important component of the plasma membrane as well as other subcellular membranes, is involved in multiple processes, including signalling. However, which enzymes control the turnover of non‐plasma membrane PI(4,5)P₂, and their impact on cell signalling and function at the organismal level are unknown. Here, we identify Paladin as a vascular PI(4,5)P₂ phosphatase regulating VEGFR2 endosomal signalling and angiogenesis. Paladin is localized to endosomal and Golgi compartments and interacts with vascular endothelial growth factor receptor 2 (VEGFR2) in vitro and in vivo. Loss of Paladin results in increased internalization of VEGFR2, over‐activation of extracellular regulated kinase 1/2, and hypersprouting of endothelial cells in the developing retina of mice. These findings suggest that inhibition of Paladin, or other endosomal PI(4,5)P₂ phosphatases, could be exploited to modulate VEGFR2 signalling and angiogenesis, when direct and full inhibition of the receptor is undesirable.