The roles of the transforming growth factor (TGF)-beta superfamily in vasculogenesis have been implicated by the findings that mutations in genes encoding for various TGF-beta superfamily signaling components exhibit defects in vascular tissues in humans and mice. Embryonic stem cell (ESC)-derived vascular progenitor cells have been shown to differentiate into both endothelial and mural cells. We showed that members of the TGF-beta superfamily play important roles during differentiation of vascular progenitor cells derived from mouse ESC. TGF-beta inhibited proliferation and sheet formation of ESC-derived endothelial cells. Interestingly, SB-431542, a synthetic molecule that inhibits the kinases of receptors for TGF-beta and activin, facilitated proliferation and sheet formation of ESC-derived endothelial cells. We also found that stimulation of ESC-derived endothelial cells with TGF-beta resulted in phosphorylation of both Smad2 and Smadl/5; BMP induced phosphorylation of Smad1/5. In this chapter, we present how to study the cellular and biochemical effects of TGF-beta signals on endothelial cells derived from mouse ESCs.