Mitogen-activated protein kinases play an integral role in several cellular processes. To regulate mitogen-activated protein kinases, cells express members of a counteracting group of proteins called phosphatases. In this study, we have identified a specific role that one member of this family of phosphatases, dual-specific phosphatase-5 (Dusp-5) plays in vascular development in vivo. We have determined that dusp-5 is expressed in angioblasts and in established vasculature and that it counteracts the function of a serine threonine kinase, Snrk-1, which also plays a functional role in angioblast development. Together, Dusp-5 and Snrk-1 control angioblast populations in the lateral plate mesoderm with Dusp-5 functioning downstream of Snrk-1. Importantly, mutations in dusp-5 and snrk-1 have been identified in affected tissues of patients with vascular anomalies, implicating the Snrk-1-Dusp-5 signaling pathway in human disease.