We hypothesized that the optimal source of cell for vascular regeneration will be the progenitor cells derived from human embryonic stem cells (ESCs) which can differentiate both into endothelial cells (ECs) as well as vascular smooth muscle cells (SMCs).CD34+ vascular progenitor cells derived from human ESCs give rise to ECs and SMCs. These two populations express cell specific transcripts and proteins, exhibit intracellular calcium in response to various agonists, and form robust tube-like structures when cocultured in Matrigel.