Cells with endothelial phenotype generated from adult peripheral blood have emerging diagnostic and therapeutic potential. This study examined the lineage relationship between, and angiogenic function of, early endothelial progenitor cells (EPCs) and late outgrowth endothelial cells (OECs) in culture. Culture conditions were established to support the generation of both EPCs and OECs from the same starting population of peripheral blood mononuclear cells (PBMCs). Utilizing differences in expression of the surface endotoxin receptor CD14, it was determined that the vast majority of EPCs arose from a CD14+ subpopulation of PBMCs but OECs developed exclusively from the CD14- fraction. Human OECs, but not EPCs, expressed key regulatory proteins endothelial nitric oxide synthase (eNOS) and caveolin-1. Moreover, OECs exhibited a markedly greater capacity for capillary morphogenesis in in vitro and in vivo matrigel models, tube formation by OECs being in part dependent on eNOS function. Collectively, these data indicate lineage and functional heterogeneity in the population of circulating cells capable of assuming an endothelial phenotype and provide rationale for the investigation of new cell-therapeutic approaches to ischemic cardiovascular disease.