OBJECTIVE: Vezf1 encodes an early zinc finger transcription factor that is essential for normal vascular development and functions in a dose-dependent manner. Here, we investigated the role of Vezf1 during processes of endothelial cell differentiation and maturation by studying mutant Vezf1 embryonic stem (ES) cells using the in vitro embryoid body differentiation model and the in vivo teratocarcinoma model. METHODS AND RESULTS: Vezf1-/- ES cell-derived embryoid bodies failed to form a well-organized vascular network and showed dramatic vascular sprouting defects. Our results indicate that the retinol pathway is an important mediator of Vezf1 function and that loss of Vezf1 results in reduced retinol/vitamin A signaling and aberrant extracellular matrix (ECM) formation. Unexpectedly, we also uncovered defects during in vitro differentiation of Vezf1-/- ES cells along hematopoietic cell lineages. Vezf1-/- ES cell-derived teratocarcinomas were able to spontaneously differentiate into cell types of all 3 germ layers. However, histological and immunohistochemical examination of these tumors showed decreased cell proliferation, delayed differentiation, and large foci of cells with extensive deposition of ECM. Embryoid bodies and teratocarcinomas derived from heterozygous ES cells displayed an intermediate phenotype. CONCLUSIONS: Together, these results suggest that Vezf1 is involved in early differentiation processes of the vasculature by regulating cell differentiation, proliferation, and ECM distribution and deposition.