To define molecular events accompanying formation of the 3-dimensional (3D) vascular tube, we have characterized gene expression during vascular endothelial growth factor (VEGF)-induced tubular morphogenesis of endothelial cells. Microarray analyses were performed comparing gene induction in growth-arrested, tube-forming endothelial cells harvested from 3D collagen cultures to that in proliferating endothelial cells cultured on fibronectin. Differentially expressed genes were clustered and analyzed for specific endothelial expression through publicly available datasets. We validated the contribution of one of the identified genes, vascular endothelial protein tyrosine phosphatase (VE-PTP), to endothelial morphogenesis. Silencing of VE-PTP expression was accompanied by increased VEGF receptor-2 (VEGFR2) tyrosine phosphorylation and activation of downstream signaling pathways. The increased VEGFR2 activity promoted endothelial cell cycle progression, overcoming the G(0)/G(1) arrest associated with organization into tubular structures in the 3D cultures. Proximity ligation showed close association between VEGFR2 and VE-PTP in resting cells. Activation of VEGFR2 by VEGF led to rapid loss of association, which was resumed with time in parallel with decreased receptor activity. In conclusion, we have identified genes, which may serve critical functions in formation of the vascular tube. One of these, VE-PTP, regulates VEGFR2 activity thereby modulating the VEGF-response during angiogenesis.