The development of the cardiovascular system and the development of the early hematopoietic systems are closely related, and both require signaling through the Tie2 receptor tyrosine kinase. Although endothelial cells and hematopoietic cells as well as their precursors share common gene expression patterns during development, it remains completely unknown how Tie2 signaling coordinately regulates cardiovascular development and early hematopoiesis in vivo. We show here that mice with a targeted mutation in tyrosine residue 1100 in the carboxyl-terminal tail of Tie2 display defective cardiac development and impaired hematopoietic and endothelial cell development in the paraaortic splanchnopleural mesoderm similar to that seen in Tie2-null mutant mice. Surprisingly, however, unlike Tie2-null mutant mice, mice deficient in signaling through this tyrosine residue show a normal association of perivascular cells with nascent blood vessels. These studies are the first to demonstrate the physiological importance of a single tyrosine residue in Tie2, and they suggest that multiple tyrosine residues in the receptor may coordinate cardiovascular development and early hematopoietic development.