Although hypoxic and/or nutritional insults during gestation are believed to contribute to congenital heart defects, the mechanisms responsible for these anomalies are not understood. Given the role vascular endothelial growth factor (VEGF) plays in response to hypoxia, it is a likely candidate for mediating deleterious effects of embryonic hypoxia. The ectopic or overproduction of endogenous factors such as VEGF may contribute to specific heart defects. Here we compared hypoxia‐induced precocious production of VEGF during early heart valve development to normal VEGF production. Mouse prevalvular cardiac endocardial cushions were explanted onto hydrated type I collagen gels under normoxic or hypoxic conditions. The extent of transformation of cardiac endothelium into mesenchyme was inversely correlated with the levels of VEGF during the various culture conditions. A soluble VEGF antagonist confirmed that endogenous production of VEGF was specific for blocking normal cushion mesenchyme formation. We further demonstrated that E10.5 endocardium retains the ability to transform into cardiac mesenchyme in the absence of endogenous VEGF. Anat Rec Part A 271A:202–208, 2003. © 2003 Wiley‐Liss, Inc.