Vascular endothelial growth factor (VEGF)–A regulates vascular development and angiogenesis. VEGF isoforms differ in ability to bind coreceptors heparan sulfate (HS) and neuropilin-1 (NRP1). We used VEGF-A165 (which binds HS and NRP1), VEGF-A121 (binds neither HS nor NRP1), and parapoxvirus VEGF-E-NZ2 (binds NRP1 but not HS) to investigate the role of NRP1 in organization of endothelial cells into vascular structures. All 3 ligands induced similar level of VEGFR-2 tyrosine phosphorylation in the presence of NRP1. In contrast, sprouting angiogenesis in differentiating embryonic stem cells (embryoid bodies), formation of branching pericyte-embedded vessels in subcutaneous matrigel plugs, and sprouting of intersegmental vessels in developing zebrafish were induced by VEGF-A165 and VEGF-E-NZ2 but not by VEGF-A121. Analyses of recombinant factors with NRP1-binding gain- and loss-of-function properties supported the conclusion that NRP1 is critical for VEGF-induced sprouting and branching of endothelial cells. Signal transduction antibody arrays implicated NRP1 in VEGF-induced activation of p38MAPK. Inclusion of the p38MAPK inhibitor SB203580 in VEGF-A165–containing matrigel plugs led to attenuated angiogenesis and poor association with pericytes. Our data strongly indicate that the ability of VEGF ligands to bind NRP1 influences p38MAPK activation, and formation of functional, pericyte-associated vessels.