We previously demonstrated the essential role of the flt-1 gene in regulating the development of the cardiovascular system. While the inactivation of the flt-1 gene leads to a very severe disorganization of the vascular system, the primary defect at the cellular level was unknown. Here we report a surprising finding that it is an increase in the number of endothelial progenitors that leads to the vascular disorganization in flt-1(-/-) mice. At the early primitive streak stage (prior to the formation of blood islands), hemangioblasts are formed much more abundantly in flt-1(-/-) embryos. This increase is primarily due to an alteration in cell fate determination among mesenchymal cells, rather than to increased proliferation, migration or reduced apoptosis of flt-1(-/-) hemangioblasts. We further show that the increased population density of hemangioblasts is responsible for the observed vascular disorganization, based on the following observations: (1) both flt-1(-/-) and flt-1(+/+) endothelial cells formed normal vascular channels in chimaeric embryos; (2) wild-type endothelial cells formed abnormal vascular channels when their population density was significantly increased; and (3) in the absence of wild-type endothelial cells, flt-1(-/-) endothelial cells alone could form normal vascular channels when sufficiently diluted in a developing embryo. These results define the primary defect in flt-1(-/-) embryos at the cellular level and demonstrate the importance of population density of progenitor cells in pattern formation.