The embryonic vasculature develops from endothelial cells that form a primitive vascular plexus which recruits smooth muscle cells to form the arterial and venous systems. The MADS-box transcription factor MEF2C is expressed in developing endothelial cells and smooth muscle cells (SMCs), as well as in surrounding mesenchyme, during embryogenesis. Targeted deletion of the mouse MEF2C gene resulted in severe vascular abnormalities and lethality in homozygous mutants by embryonic day 9.5. Endothelial cells were present and were able to differentiate, but failed to organize normally into a vascular plexus, and smooth muscle cells did not differentiate in MEF2C mutant embryos. These vascular defects resemble those in mice lacking the vascular-specific endothelial cell growth factor VEGF or its receptor Flt-1, both of which are expressed in MEF2C mutant embryos. These results reveal multiple roles for MEF2C in vascular development and suggest that MEF2-dependent target genes mediate endothelial cell organization and SMC differentiation.