TIE-1 and Tie-2 define a new class of receptor tyrosine kinases that are specifically expressed in developing vascular endothelial cells. To study the functions of Tie-1 and Tie-2 during vascular endothelial cell growth and differentiation in vivo, targeted mutations of the genes in mice were introduced by homologous recombination. Embryos deficient in Tie-1 failed to establish structural integrity of vascular endothelial cells, resulting in oedema and subsequently localized haemorrhage. However, analyses of embryos deficient in Tie-2 showed that it is important in angiogenesis, particularly for vascular network formation in endothelial cells. This result contrasts with previous reports on Tie-2 function in vasculogenesis and/or endothelial cen survival. Our in vivo analyses indicate that the structurally related receptor tyrosine kinases Tie-1 and Tie-2 have important hut distinct roles in the formation of blood vessels.