AbstractVE-PTP, a receptor-type phosphotyrosine phosphatase, associates with the tyrosine kinase receptor Tie-2 and VE-cadherin and enhances the adhesive function of the latter. Here, VE-PTP was found to be restricted to endothelial cells, with a preference for arterial endothelium. Mutant mice expressing a truncated, secreted form of VE-PTP lacking the cytoplasmic and transmembrane domains and the most membrane-proximal extracellular fibronectin type III repeat, showed severe vascular malformations causing lethality at 10 days of gestation. Although blood vessels were initially formed, the intraembryonic vascular system soon deteriorated. Blood vessels in the yolk sac developed into dramatically enlarged cavities. In explant cultures of mutant allantoides, endothelial cells were found next to vessel structures growing as cell layers. No signs for enhanced endothelial apoptosis or proliferation were observed. Thus, the activity of VE-PTP is not required for the initial formation of blood vessels, yet it is essential for their maintenance and remodeling.