Embryonic stem cell (ESC)-derived embryoid body (EB) is a unique model for studying vascular development, in that it provides a three-dimensional microenvironment that mimics an in vivo milieu. When using gene-targeting EBs to study certain defects in vascular morphogenesis, it is necessary to determine whether the defect is due to the intrinsic loss of the gene in endothelial cells (EC) or rather due to the lack of surrounding factors that would typically promote vascular development. Here we describe a chimeric EB vessel development model, in which the utilization of the PECAM-GFP reporter gene in wild-type ESCs allows for the introduction of "normal" extracellular factors formed by its parallel differentiation to the gene-deletion EC that might otherwise be devoid of these factors.