The transcription factor SCL/tal-1 is essential for blood cell development. Though it is also expressed in vascular endothelium, SCL has been considered dispensable for vessel formation. Through transgenic rescue of hematopoietic defects of SCL^−/− embryos and analysis of chimeras generated with SCL^−/− ES cells tagged with a transgene expressed in vascular endothelial cells, we show that SCL is essential for angiogenic remodeling of the yolk sac capillary network into complex vitelline vessels. These findings establish a role for SCL in embryonic angiogenesis and argue for critical functions in both embryonic blood and vascular cells, the descendents of the presumptive hemangioblast.