Tie2 is a receptor-type tyrosine kinase expressed on hematopoietic stem cells and endothelial cells. We used cultured embryonic stem (ES) cells to determine the function of Tie2 during early vascular development and hematopoiesis. Upon differentiation, the ES cell-derived Tie2+ Flk1+ fraction was enriched for hematopoietic and endothelial progenitor cells. To investigate lymphatic differentiation, we used a monoclonal antibody against LYVE-1 and found that LYVE-1+ cells derived from Tie2+ Flk1+ cells possessed various characteristics of lymphatic endothelial cells. To determine whether Tie2 played a role in this process, we analyzed differentiation of Tie2-/- ES cells. Although the initial numbers of LYVE-1+ and PECAM-1+ cells derived from Tie2-/- cells did not vary significantly, the number of both decreased dramatically upon extended culturing. Such decreases were rescued by treatment with a caspase inhibitor, suggesting that reductions were due to apoptosis as a consequence of a lack of Tie2 signaling. Interestingly, Tie2-/- ES cells did not show measurable defects in development of the hematopoietic system, suggesting that Tie2 is not essential for hematopoietic cell development.