Vascular endothelial growth factor receptor 2 (VEGFR2) transmits signals of crucial importance to vasculogenesis, including proliferation, migration, and differentiation of vascular progenitor cells. Embryonic stem cell–derived VEGFR2 + mesodermal cells differentiate into mural lineage in the presence of platelet derived growth factor (PDGF)–BB or serum but into endothelial lineage in response to VEGF-A. We found that inhibition of H-Ras function by a farnesyltransferase inhibitor or a knockdown technique results in selective suppression of VEGF-A–induced endothelial specification. Experiments with ex vivo whole-embryo culture as well as analysis of H- ras − / − mice also supported this conclusion. Furthermore, expression of a constitutively active H-Ras[G12V] in VEGFR2 + progenitor cells resulted in endothelial differentiation through the extracellular signal-related kinase (Erk) pathway. Both VEGF-A and PDGF-BB activated Ras in VEGFR2 + progenitor cells 5 min after treatment. However, VEGF-A, but not PDGF-BB, activated Ras 6–9 h after treatment, preceding the induction of endothelial markers. VEGF-A thus activates temporally distinct Ras–Erk signaling to direct endothelial specification of VEGFR2 + vascular progenitor cells.