The de novo formation of blood vessels (vasculogenesis) is an integral part of embryogenesis. Elucidation of the role of cytokine cooperation in vasculogenesis may lead to a better understanding of organogenesis, blood vessel regulation during tumorigenesis, and tissue injury. We have used embryonic stem cells to derive an endothelial cell line, designated IEM, which expresses a range of endothelial markers, including Von Willibrand Factor VIII related antigen, vascular cell adhesion molecule, platelet-endothelial cell adhesion molecule (CD31), and receptors for acetylated low-density lipoprotein. More importantly, IEM cells can be induced upon exposure to combinations of basic fibroblast growth factor and leukemia inhibitory factor (LIF) to proliferate and undergo vasculogenesis in vitro, resulting in the formation of vascular tubes and microcapillary anastomoses. Moreover, exposure to both cytokines conditionally permits IEM cells to specifically chimerize microvascular endothelium in vivo following blastocyst injection. These results indicate that bFGF and LIF together contribute to the induction and support of embryonic vasculogenesis in an isolated endothelial cell line. Our results provide evidence that combined actions of bFGF/LIF may play a role in mechanisms controlling blood vessel development.