Recent findings support the hypothesis that the CD34⁺-cell population in bone marrow and peripheral blood contains hematopoietic and endothelial progenitor and stem cells. In this study, we report that human AC133⁺ cells from granulocyte colony-stimulating factor–mobilized peripheral blood have the capacity to differentiate into endothelial cells (ECs). When cultured in the presence of vascular endothelial growth factor (VEGF) and the novel cytokine stem cell growth factor (SCGF), AC133⁺ progenitors generate both adherent and proliferating nonadherent cells. Phenotypic analysis of the cells within the adherent population reveals that the majority display endothelial features, including the expression of KDR, Tie-2, Ulexeuropaeus agglutinin-1, and von Willebrand factor. Electron microscopic studies of these cells show structures compatible with Weibel-Palade bodies that are found exclusively in vascular endothelium. AC133-derived nonadherent cells give rise to both hematopoietic and endothelial colonies in semisolid medium. On transfer to fresh liquid culture with VEGF and SCGF, nonadherent cells again produce an adherent and a nonadherent population. In mice with severe combined immunodeficiency, AC133-derived cells form new blood vessels in vivo when injected subcutaneously together with A549 lung cancer cells. These data indicate that the AC133⁺-cell population consists of progenitor and stem cells not only with hematopoietic potential but also with the capacity to differentiate into ECs. Whether these hematopoietic and endothelial progenitors develop from a common precursor, the hemangioblast will be studied at the single-cell level.