Lymphatic vessels are essential for the removal of interstitial fluid and prevention of tissue edema. Lymphatic capillaries lack associated mural cells, and collecting lymphatic vessels have valves, which prevent lymph backflow. In lymphedema-distichiasis (LD), lymphatic vessel function fails because of mutations affecting the forkhead transcription factor FOXC2. We report that Foxc2(-/-) mice show abnormal lymphatic vascular patterning, increased pericyte investment of lymphatic vessels, agenesis of valves and lymphatic dysfunction. In addition, an abnormally large proportion of skin lymphatic vessels was covered with smooth muscle cells in individuals with LD and in mice heterozygous for Foxc2 and for the gene encoding lymphatic endothelial receptor, Vegfr3 (also known as Flt4). Our data show that Foxc2 is essential for the morphogenesis of lymphatic valves and the establishment of a pericyte-free lymphatic capillary network and that it cooperates with Vegfr3 in the latter process. Our results indicate that an abnormal interaction between the lymphatic endothelial cells and pericytes, as well as valve defects, underlie the pathogenesis of LD.