Vascular endothelial growth factor (VEGF, VEGF-A), a selective mitogen for endothelial cells is a critical factor for vascular development. Two isoforms that differ in the presence of exons 6 and 7, Vegf(165) and Vegf(121), are the dominant forms expressed in zebrafish embryo. Simultaneous overexpression of both isoforms in the embryo results in increased production of flk1, tie1, scl, and gata1 transcripts, indicating a stimulation of both endothelial and hematopoietic lineages. We also demonstrate that vegf can stimulate hematopoiesis in zebrafish by promoting the formation of terminally differentiated red blood cells. Simultaneous overexpression of both isoforms also causes ectopic vasculature and blood cells in many of the injected embryos as well as pericardial edema in later stage embryos. Overexpression of vegf also resulted in earlier onset of flk1, tie1, scl, and gata1 expression in the embryo, indicating a possible role of vegf in stimulating the differentiation of both vascular and hematopoietic lineages. Co-injection of RNAs for both isoforms results in increased expression of three of these markers over and above that observed when either RNA is singly injected and analysis of vegf expression in the notochord mutants no tail and floating head suggests that the notochord patterns the formation of the dorsal aorta by stimulating adjacent somite cells to express vegf, which in turn functions as a signal in dorsal aorta patterning. Finally, studies of vegf expression in cloche mutant indicate that vegf expression is generally independent of cloche function. These results show that in the zebrafish embryo, vegf can not only stimulate endothelial cell differentiation but also hematopoiesis. Moreover, these effects are most dramatic when both vegf isoforms are co-expressed, indicating a synergistic effect of the expression of the two forms of the VEGF protein.