Inhibition by all-trans retinoic acid (atRA) of the microvasculature formation in chicken chorioallantoic membrane (CAM) accompanied remarkably reduced numbers of endothelial cells (ECs) and increased numbers of mural cells (MCs) under the chorionic epithelial layer. Ro41-5253 (retinoid antagonist) exerted the opposite effect. Although atRA did not affect the differentiation of murine embryonic stem cell-derived vascular progenitor cells (VPCs) into ECs or MCs, atRA suppressed EC-MC interaction, leading to impaired branching. In both atRA-treated VPC cultures and CAM tissues underneath the chorionic epithelial layer, the expression of angiopoietin-2 (Ang-2; competitor for Ang-1) was enhanced, whereas that of Tie2 (a receptor for Angs) was reduced. Simultaneous treatment with Ang-1 partially blocked RA induction of EC-MC malinteraction and reduction in blood vessel formation. These results suggest that retinoid(s) may reduce EC-MC interaction by down-regulating Tie2 signaling as well as decreased EC numbers, which lead to impaired vascular remodeling.