Endothelial cells express two classical cadherins, VE-cadherin and N-cadherin. VE-cadherin is absolutely required for vascular morphogenesis, but N-cadherin is thought to participate in vessel stabilization by interacting with periendothelial cells during vessel formation. However, recent data suggest a more critical role for N-cadherin in endothelium that would regulate angiogenesis, in part by controlling VE-cadherin expression. In this study, we have assessed N-cadherin function in vascular development using an in vitro model derived from embryonic stem (ES) cell differentiation. We show that pluripotent ES cells genetically null for N-cadherin can differentiate normally into endothelial cells. In addition, sprouting angiogenesis was unaltered, suggesting that N-cadherin is not essential for the early events of angiogenesis. However, the lack of N-cadherin led to an impairment in pericyte covering of endothelial outgrowths. We conclude that N-cadherin is necessary neither for vasculogenesis nor proliferation and migration of endothelial cells but is required for the subsequent maturation of endothelial sprouts by interacting with pericytes.