The lymphatic vasculature preserves tissue fluid balance by absorbing fluid and macromolecules and transporting them to the blood vessels for circulation. The stepwise process leading to the formation of the mammalian lymphatic vasculature starts by the expression of the gene Prox1 in a subpopulation of blood endothelial cells (BECs) on the cardinal vein (CV) at approximately E9.5. These Prox1-expressing lymphatic endothelial cells (LECs) will exit the CV to form lymph sacs, primitive structures from which the entire lymphatic network is derived. Until now, no conclusive information was available regarding the cellular processes by which these LEC progenitors exit the CV without compromising the vein's integrity. We determined that LECs leave the CV by an active budding mechanism. During this process, LEC progenitors are interconnected by VE-cadherin–expressing junctions. Surprisingly, we also found that Prox1-expressing LEC progenitors were present not only in the CV but also in the intersomitic vessels (ISVs). Furthermore, as LEC progenitors bud from the CV and ISVs into the surrounding mesenchyme, they begin expressing the lymphatic marker podoplanin, migrate away from the CV, and form the lymph sacs. Analyzing this process in Prox1-null embryos revealed that Prox1 activity is necessary for LEC progenitors to exit the CV.