Vascular endothelial growth factor (VEGF) is essential for the differentiation of the primitive embryonic vascular system and has been implicated in the vascularization of organs. Recently, VEGF has also been proposed to play a role in neural development, neuroprotection, and adult neurogenesis. Here we have investigated the function of VEGF in the developing brain by cre-lox technology. We show that VEGF produced by the embryonic neuroectoderm is required for the vascularization and the development of the brain. Both the invasion and the directed growth of capillaries were severely impaired in the fore-, midand hindbrain of VEGFlox/lox/nestin-cre mouse embryos homozygous for a VEGF mutation in the neural tube. These observations demonstrate thatVEGF, via local secretion by neural progenitors, induces brain angiogenesis and guides the growth of capillaries toward the ventricular zone. VEGF deficiency led to developmental retardation and progressive destruction of neural tissue in all brain regions.The defect was most pronounced in telencephalic structures, such as the hippocampus, and caused microcephaly.Taken together, the findings establish the critical importance of neuroectoderm-derived VEGF in the morphogenesis of the brain. VEGF acts as a key regulator of brain angiogenesis and provides instructive cues for the correct spatial organization of the vasculature.