Despite the clear importance of Hedgehog (Hh) signaling in blood vascular development as shown by genetic analysis, its mechanism of action is still uncertain. To better understand the role of Hh in vascular development, we further characterized its roles in vascular development in mouse embryos and examined its interaction with vascular endothelial growth factor (VEGF), a well-known signaling pathway essential to blood vascular development. We found that VEGF expression in the mouse embryo depended on Hh signaling, and by using genetic rescue approaches, we demonstrated that the role of Hh both in endothelial tube formation and Notch-dependent arterial identity was solely dependent on its regulation of VEGF. In contrast, overactivation of the Hh pathway through deletion of Patched1 (Ptch1), a negative regulator of Hh signaling, resulted in reduced vascular density and increased Delta-like ligand 4 expression. The Ptch1 phenotype was independent of VEGF pathway dysregulation and was not rescued when Delta-like ligand 4 levels were restored to normal. These findings establish that Hh uses both VEGF- and Notch-dependent and -independent mechanisms to pattern specific events in early blood vascular development.