API security is significant in software development as it protects sensitive data and ensures the integrity of applications. As APIs facilitate communication between different software systems, they become prime targets for attackers seeking to exploit vulnerabilities. Proper security measures, like authentication, encryption, and rate limiting, are crucial for safeguarding API endpoints. API security also supports compliance with industry regulations, mitigating legal and financial risks for organizations. Investing in robust API security fosters trust among users, ensures smooth application performance, and protects against data breaches, making it integral to modern software development.