Sphingolipid signaling pathways have been implicated in many critical cellular events. Sphingosine-1-phosphate (SPP), a sphingolipid metabolite found in high concentrations in platelets and blood, stimulates members of the endothelial differentiation gene (Edg) family of G protein-coupled receptors and triggers diverse effects, including cell growth, survival, migration, and morphogenesis. To determine the in vivo functions of the SPP/Edg signaling pathway, we disrupted the Edg1 gene in mice. Edg1(-/-) mice exhibited embryonic hemorrhage leading to intrauterine death between E12.5 and E14.5. Vasculogenesis and angiogenesis appeared normal in the mutant embryos. However, vascular maturation was incomplete due to a deficiency of vascular smooth muscle cells/pericytes. We also show that Edg-1 mediates an SPP-induced migration response that is defective in mutant cells due to an inability to activate the small GTPase, Rac. Our data reveal Edg-1 to be the first G protein-coupled receptor required for blood vessel formation and show that sphingolipid signaling is essential during mammalian development.