Vascular permeability is a complex process by which the endothelium dynamically controls the degree of extravasation of fluid, solutes, macromolecules, and cells across a blood-tissue barrier. The cell-cell barriers are established and maintained by the presence of several types of intercellular junctions, including tight junctions (TJs). Claudins (CLDNs), a 27-member family of proteins regarded as its backbone of cell junctions, are the major structural components of the TJs. Although Claudin 17 (CLDN17), a putative pore-forming CLDN, is assumed to regulate anion balance across the blood-tissue barriers, our knowledge about CLDN17 is limited. Interestingly, our preliminary studies showed a correlation between reduced CLDN17 expression and increased vascular permeability. Hence, we hypothesized that CLDN17 is essential in maintaining the blood-tissue barrier, thus preventing tissue injury and inflammation. We generated human endothelial cells and epithelial cells deficient in CLDN17 and determined endothelial and epithelial-barrier resistance changes in vitro. We also developed a Cldn17–/– mice for phenotypic analysis of blood-tissue barriers in vivo. In our study, expression of CLDN17 was increased with angiopoietin-1 and decreased with VEGF treatment. CLDN17 loss in endothelial and epithelial cells reduced the barrier resistance and modulated other TJ and adherens junction (AJ) proteins. Treatment of endothelial cells with β-catenin inhibitor, ICG-001, rescued CLDN17 from LPS-induced downregulation. In vivo, Cldn17–/– mice had no breeding abnormalities but exhibited delayed growth, increased vascular leakage, enhanced angiogenesis in a tumor xenograft model, impaired ion homeostasis, and increased bone density. Intriguingly, loss of Cldn17 led to increased inflammation and leukocytosis, and injury to the lungs and kidneys. RNA seq analysis of WT and Cldn17–/– kidney samples corroborated these findings with increased expression of genes regulating inflammation, cell polarity, and angiogenesis. Our study unveils the importance of CLDN17 in endothelial and epithelial cell barrier function and vascular permeability with a long-term translational impact in developing novel therapeutics for diseases associated with injuries to the blood-tissue barrier, such as acute lung and kidney injuries.