CYR61 (CCN1) is a member of the CCN family of secreted matricellular proteins that includes connective tissue growth factor (CCN2), NOV (CCN3), WISP-1 (CCN4), WISP-2 (CCN5), and WISP-3 (CCN6). First identified as the product of a growth factor-inducible immediate-early gene, CYR61 is an extracellular matrix-associated angiogenic inducer that functions as a ligand of integrin receptors to promote cell adhesion, migration, and proliferation. Aberrant expression of Cyr61 is associated with breast cancer, wound healing, and vascular diseases such as atherosclerosis and restenosis. To understand the functions of CYR61 during development, we have disrupted the Cyr61 gene in mice. We show here that Cyr61-null mice suffer embryonic death: ∼30% succumbed to a failure in chorioallantoic fusion, and the reminder perished due to placental vascular insufficiency and compromised vessel integrity. These findings establish CYR61 as a novel and essential regulator of vascular development. CYR61 deficiency results in a specific defect in vessel bifurcation (nonsprouting angiogenesis) at the chorioallantoic junction, leading to an undervascularization of the placenta without affecting differentiation of the labyrinthine syncytiotrophoblasts. This unique phenotype is correlated with impaired Vegf-C expression in the allantoic mesoderm, suggesting that CYR61-regulated expression of Vegf-C plays a role in vessel bifurcation. The genetic and molecular basis of vessel bifurcation is presently unknown, and these findings provide new insight into this aspect of angiogenesis.