OBJECTIVE—To develop an embryoid body-free directed differentiation protocol for the rapid generation of functional vascular endothelial cells derived from human embryonic stem cells (hESCs) and to assess the system for microRNA regulation and angiogenesis. METHODS AND RESULTS—The production of defined cell lineages from hESCs is a critical requirement for evaluating their potential in regenerative medicine. We developed a feeder- and serum-free protocol. Directed endothelial differentiation of hESCs revealed rapid loss of pluripotency markers and progressive induction of mRNA and protein expression of vascular markers (including CD31 and vascular endothelial VE-cadherin) and angiogenic growth factors (including vascular endothelial growth factor), increased expression of angiogenesis-associated microRNAs (including miR-126 and miR-210), and induction of endothelial cell morphological features. In vitro, differentiated cells produced nitric oxide, migrated across a wound, and formed tubular structures in both the absence and the presence of 3D matrices (Matrigel). In vivo, we showed that cells that differentiated for 10 days before implantation were efficient at the induction of therapeutic neovascularization and that hESC-derived cells were incorporated into the blood-perfused vasculature of recipient mice. CONCLUSION—The directed differentiation of hESCs is efficient and effective for the differentiation of functional endothelial cells from hESCs.