While Blood vessel epicardial substance (Bves) confers adhesive properties, the molecular mechanism of regulating this activity is unknown. No predicted functional motifs in this highly conserved integral membrane protein, other than the transmembrane domain, have been identified. Here, we report for the first time that Bves interacts with itself through an intracellular interaction domain that is essential for its intercellular adhesion activity. Glutathion-S-transferase (GST) pull-down and SPOTs analyses mapped this domain to amino acids 268-274 in the intracellular C-terminus. Site-directed mutagenesis revealed that lysines 272 and 273 are essential for homodimerization and cell adhesion. Human corneal cells transfected with wild-type Bves trafficked the protein to the cell surface, assembled junction complexes and formed epithelial sheets. In contrast, cells expressing Bves mutated at these positions did not form continuous epithelial sheets or maintain junctional proteins such as ZO-1 and E-cadherin at the membrane. A dramatic reduction in transepithelial electrical resistance was also observed indicating a functional loss of tight junctions. Importantly, expression of mutated Bves in epithelial cells promoted the transformation of cells from an epithelial to a mesenchymal phenotype. This study is the first to demonstrate the essential nature of any domain within Bves for maintenance of epithelial phenotype and function.