Deletion of the transforming growth factor β1 (TGF‐β1) gene in mice has previously suggested that it regulates both hematopoiesis and angiogenesis. To define the function of TGF‐β more precisely, we inactivated the TGF‐β type I receptor (TβRI) gene by gene targeting. Mice lacking TβRI die at midgestation, exhibiting severe defects in vascular development of the yolk sac and placenta, and an absence of circulating red blood cells. However, despite obvious anemia in the TβRI−/− yolk sacs, clonogenic assays on yolk sac‐derived hematopoietic precursors in vitro revealed that TβRI−/− mice exhibit normal hematopoietic potential compared with wild‐type and heterozygous siblings. Endothelial cells derived from TβRI‐deficient embryos show enhanced cell proliferation, improper migratory behavior and impaired fibronectin production in vitro, defects that are associated with the vascular defects seen in vivo. We thus demonstrate here that, while TβRI is crucial for the function of TGF‐β during vascular development and can not be compensated for by the activin receptor‐like kinase‐1 (ALK‐1), functional hematopoiesis and development of hematopoietic progenitors is not dependent on TGF‐β signaling via TβRI.