One of the key mechanisms linking cell signaling and control of gene expression is reversible phosphorylation of transcription factors. FOXC2 is a forkhead transcription factor that is mutated in the human vascular disease lymphedema-distichiasis and plays an essential role in lymphatic vascular development. However, the mechanisms regulating FOXC2 transcriptional activity are not well understood. We report here that FOXC2 is phosphorylated on eight evolutionarily conserved proline-directed serine/threonine residues. Loss of phosphorylation at these sites triggers substantial changes in the FOXC2 transcriptional program. Through genome-wide location analysis in lymphatic endothelial cells, we demonstrate that the changes are due to selective inhibition of FOXC2 recruitment to chromatin. The extent of the inhibition varied between individual binding sites, suggesting a novel rheostat-like mechanism by which expression of specific genes can be differentially regulated by FOXC2 phosphorylation. Furthermore, unlike the wild-type protein, the phosphorylation-deficient mutant of FOXC2 failed to induce vascular remodeling in vivo. Collectively, our results point to the pivotal role of phosphorylation in the regulation of FOXC2-mediated transcription in lymphatic endothelial cells and underscore the importance of FOXC2 phosphorylation in vascular development.