Vascular endothelial-cadherin (VE-cadherin) is exclusively expressed in endothelial cells and is strictly located at cell-to-cell junctions. As the other members of the cadherin family, VE-cadherin is able to mediate a homotypic type of cellular interaction in a Ca2+-dependent manner. In the mouse embryo, VE-cadherin transcripts are detected at the earliest stages of vascular development. To ascertain if VE-cadherin expression is required for the assembly of endothelial cells into vascular structures, we generated VE-cadherin-negative mouse embryonic stem cells (VE-cadherin-/- ES cells) by gene targeting and examined the consequences on vascular development of ES-derived embryoid bodies (EBs). In contrast to wild-type EBs, we observed that endothelial cells remained dispersed and failed to organize a vessel-like pattern in VE-cadherin-/- ES-derived EBs. However, dispersed VE-cadherin-/- ES-derived endothelial cells expressed a large range of other endothelial markers. Moreover, the targeted null-mutation in the VE-cadherin locus did not interfere with the hematopoietic differentiation potential of ES cells. These in vitro experiments are consistent with a pivotal role of VE-cadherin in vascular structure assembly.