Under defined conditions, mesenchymal stem cells can differentiate into unique cell types, making them attractive candidates for cell-based disease therapies. Ischemic diseases would greatly benefit from treatments that include the formation of new blood vessels from mesenchymal stem cells. However, blood vessels are complex structures composed of endothelial cells and smooth muscle cells, and their assembly and function in a diseased environment is reliant upon joining with the pre-existing vasculature. Although endothelial cell/smooth muscle cell interactions are well known, how endothelial cells may influence mesenchymal stem cells and facilitate their differentiation has not been defined. Therefore, we sought to explore how endothelial cells might drive mesenchymal stem cells toward a smooth muscle fate. Our data show that cocultured endothelial cells induce smooth muscle cell differentiation in mesenchymal stem cells. Endothelial cells can promote a contractile phenotype, reduce proliferation, and enhance collagen synthesis and secretion. Our data show that Notch signaling is essential for endothelial cell-dependent differentiation, and this differentiation pathway is largely independent of growth factor signaling mechanisms.