Vascular development begins with the formation of a primary vascular plexus that is rapidly remodeled by angiogenesis into the interconnected branched patterns characteristic of mature vasculature. Several receptor tyrosine kinases and their ligands have been implicated to control early development of the vascular system. These include the vascular endothelial growth factor receptors (VEGFR-1 and VEGFR-2) that bind VEGF, the Tie-1 and Tie-2 receptors that bind the angiopoietins, and the EphB4 receptor that binds the membrane-anchored ligand ephrin-B2. Targeted mutations in the mouse germline have revealed essential functions for these molecules in vascular development. In particular, protein-null mutations that delete either EphB4 or ephrin-B2 from the mouse have been shown to result in early embryonic lethality due to failed angiogenic remodeling. The venous expression of EphB4 and arterial expression of ephrin-B2 has lead to the speculation that the interaction of these two molecules leads to bidirectional signaling into both the receptor-expressing cell and the ligand-expressing cell, and that both forward and reverse signals are required for proper development of blood vessels in the embryo. Indeed, targeted removal of the ephrin-B2 carboxy-terminal cytoplasmic tail by another group was shown to perturb vascular development and result in the same early embryonic lethality as the null mutation, leading the authors to propose that ephrin-B2 reverse signaling directs early angiogenic remodeling of the primary vascular plexus [Cell 104 (2001) 57]. However, we show here that the carboxy-terminal cytoplasmic domain of ephrin-B2, and hence reverse signaling, is not required during early vascular development, but it is necessary for neonatal survival and functions later in cardiovascular development in the maturation of cardiac valve leaflets. We further show that ephrin-B2 reverse signaling is required for the pathfinding of axons that form the posterior tract of the anterior commissure. Our results thus indicate that ephrin-B2 functions in the early embryo as a typical instructive ligand to stimulate EphB4 receptor forward signaling during angiogenic remodeling and that later in embryonic development ephrin-B2 functions as a receptor to transduce reverse signals involved in cardiac valve maturation and axon pathfinding.