The blood-brain barrier (BBB) restricts molecular and cellular trafficking between the blood and the CNS. Although astrocytes are known to control BBB permeability, the molecular determinants of this effect remain unknown. We show that angiotensinogen (AGT) produced and secreted by astrocytes is cleaved into angiotensin II (AngII) and acts on type 1 angiotensin receptors (AT1) expressed by BBB endothelial cells (ECs). Activation of AT1 restricts the passage of molecular tracers across human BBB-derived ECs through threonine-phosphorylation of the tight junction protein occludin and its mobilization to lipid raft membrane microdomains. We also show that AGT knock-out animals have disorganized occludin strands at the level of the BBB and a diffuse accumulation of the endogenous serum protein plasminogen in the CNS, compared with wild-type animals. Finally, we demonstrate a reduction in the number of AGT-immunopositive perivascular astrocytes in multiple sclerosis (MS) lesions, which correlates with a reduced expression of occludin similarly seen in the CNS of AGT knock-out animals. Such a reduction in astrocyte-expressed AGT and AngII is dependent, in vitro, on the proinflammatory cytokines tumor necrosis factor-alpha and interferon-gamma. Our study defines a novel physiological role for AngII in the CNS and suggests that inflammation-induced downregulation of AngII production by astrocytes is involved in BBB dysfunction in MS lesions.