During gastrulation of the mouse embryo, progenitor cells of the endothelium of blood vessels are allocated to different compartments of the extraembryonic and embryonic tissues in accordance to the timing and the site of recruitment to the mesodermal layer. In the yolk sac, the endothelium and the erythropoietic progenitors are populated by different groups of mesodermal cells, suggesting that they may not be derived from a common pool of progenitors. An orderly pattern of movement of mesodermal cells and the provision of proper intercellular transforming growth factor beta (TGF beta) and vascular endothelial growth factor (VEGF) signaling by neighboring germ layer tissues are essential for normal morphogenesis of the vasculature.