Angiopoietin-1 (Ang1) plays a crucial role in vascular and hematopoietic development, mainly through its cognate receptor Tie2. However, little is known about the precise role of Ang1 in embryonic stem cell (ESC) differentiation. In the present study, we used COMP-Ang1 (a soluble and potent variant of Ang1) to explore the effect of Ang1 on endothelial and hematopoietic differentiation of mouse ESCs in an OP9 coculture system and found that Ang1 promoted endothelial cell (EC) differentiation from Flk-1(+) mesodermal precursors. This effect mainly occurred through Tie2 signaling and was altered in the presence of soluble Tie2-Fc. We accounted for this Ang1-induced expansion of ECs as enhanced proliferation and survival. Ang1 also had an effect on CD41(+) cells, transient precursors that can differentiate into both endothelial and hematopoietic lineages. Intriguingly, Ang1 induced the preferential differentiation of CD41(+) cells toward ECs instead of hematopoietic cells. This EC expansion promoted by Ang1 was also recapitulated in induced pluripotent stem cells (iPSCs) and human ESCs. We successfully achieved in vivo neovascularization in mice by transplantation of ECs obtained from Ang1-stimulated ESCs. We conclude that Ang1/Tie2 signaling has a pivotal role in ESC-EC differentiation and that this effect can be exploited to expand EC populations.