The vasculature develops primarily through two processes, vasculogenesis and angiogenesis. Although much work has been published on angiogenesis, less is known of the mechanisms regulating the de novo formation of the vasculature commonly called vasculogenesis. Human embryonic stem cells (hESC) have the capability to produce all of the cells of the body and have been used as in vitro models to study the molecular signals controlling differentiation and vessel assembly. One such regulatory molecule is bone morphogenetic protein-4 (BMP4), which is required for mesoderm formation and vascular/hematopoietic specification in several species. However, hESC grown in feeder-free conditions and treated with BMP4 differentiate into a cellular phenotype highly expressing a trophoblast gene profile. Therefore, it is unclear what role, if any, BMP4 plays in regulating vascular development in hESC. Here we show in two National Institutes of Health-registered hESC lines (BG02 and WA09) cultured on a 3D substrate of Matrigel in endothelial cell growth medium-2 that the addition of BMP4 (100 ng/ml) for 3 days significantly increases the formation and outgrowth of a network of cells reminiscent of capillary-like structures formed by mature endothelial cells (P<0.05). Analysis of the expression of 45 genes by quantitative real time-polymerase chain reaction on a low-density array of the entire culture indicates a rapid and significant downregulation of pluripotent and most ectodermal markers with a general upregulation of endoderm, mesoderm, and endothelial markers. Of the genes assayed, BMPR2 and RUNX1 were differentially affected by exposure to BMP4 in both cell lines. Immunocytochemistry indicates the morphological structures formed were negative for the mature endothelial markers CD31 and CD146 as well as the neural marker SOX2, yet positive for the early vascular markers of endothelium (KDR, NESTIN) and smooth muscle cells (alpha-smooth muscle actin [alpha SMA]). Together, these data suggest BMP4 can enhance the formation and outgrowth of an immature vascular system.