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Interaction between endothelial cells and mural cells (pericytes and vascular smooth muscle) is essential for vascular development and maintenance. Endothelial cells arise from Flk1-expressing (Flk1+) mesoderm cells,whereas mural cells are believed to derive from mesoderm,neural crest or epicardial cells and migrate to form the vessel wall. Difficulty in preparing pure populations of these lineages has hampered dissection of the mechanisms underlying vascular formation. Here we show that Flk1+ cells derived from embryonic stem cells can differentiate into both endothelial and mural cells and can reproduce the vascular organization process. Vascular endothelial growth factor promotes endothelial cell differentiation,whereas mural cells are induced by platelet-derived growth factor-BB. Vascular cells derived from Flk1+ cells can organize into vessel-like structures consisting of endothelial tubes supported by mural cells in three-dimensional culture. Injection of Flk1+ cells into chick embryos showed that they can incorporate as endothelial and mural cells and contribute to the developing vasculature in vivo. Our findings indicate that Flk1+ cells can act as 'vascular progenitor cells' to form mature vessels and thus offer potential for tissue engineering of the vascular system. View Publication