The mature circulatory system is comprised of two parallel, yet distinct, vascular networks that carry blood to and from the heart. Studies have suggested that endothelial tubes are specified as arteries and veins at the earliest stages of angiogenesis, before the onset of circulation. To understand the molecular basis for arterial-venous identity, we have focused our studies on a human vascular dysplasia, hereditary haemorrhagic telangiectasia (HHT), wherein arterial and venous beds fail to remain distinct. Genetic studies have demonstrated that HHT can be caused by loss-of-function mutations in the gene encoding activin receptor-like kinase-1 (ACVRL1; ref. 5). ACVRL1 encodes a type I receptor for the TGF-beta superfamily of growth factors. At the earliest stage of vascular development, mice lacking Acvrl1 develop large shunts between arteries and veins, downregulate arterial Efnb2 and fail to confine intravascular haematopoiesis to arteries. These mice die by mid-gestation with severe arteriovenous malformations resulting from fusion of major arteries and veins. The early loss of anatomical, molecular and functional distinctions between arteries and veins indicates that Acvrl1 is required for developing distinct arterial and venous vascular beds.