Vascular development is a complex process. In the past decade, significant advances have been made in the understanding of molecular mechanisms underlying vascular system development. Most recently, a model describing a signaling pathway that governs the differentiation of arteries and veins has emerged. Furthermore, the idea that angiogenesis of arteries and veins are coordinately but also differentially regulated has been proposed based on several pieces of molecular evidence. This article discusses the historical background leading to these most recent discoveries of signaling pathways that dictate arterial-venous formation and proposes a model that describes how arterial and venous systems are specified and established. The article also discusses future perspectives of this exciting area of vascular development in concluding remarks.