During sprouting angiogenesis, groups of endothelial cells (ECs) migrate together in units called sprouts. In this study, we demonstrate that the vascular-specific secreted factor EGFL7 regulates the proper spatial organization of ECs within each sprout and influences their collective movement. In the homozygous Egfl7-knockout mice, vascular development is delayed in many organs despite normal EC proliferation, and 50% of the knockout embryos die in utero. ECs in the mutant vasculatures form abnormal aggregates and the vascular basement membrane marker collagen IV is mislocalized, suggesting that ECs fail to recognize the proper spatial position of their neighbors. Although the migratory ability of individual ECs in isolation is not affected by the loss of EGFL7, the aberrant spatial organization of ECs in the mutant tissues decreases their collective movement. Using in vitro and in vivo analyses, we showed that EGFL7 is a component of the interstitial extracellular matrix deposited on the basal sides of sprouts,a location suitable for conveying positional information to neighboring ECs. Taken together, we propose that EGFL7 defines the optimal path of EC movement by assuring the correct positioning of each EC in a nascent sprout.