Erythro-myeloid progenitors (EMPs) were recently described to arise from the yolk sac endothelium, just prior to vascular remodeling, and are the source of adult/post-natal tissue resident macrophages. Questions remain, however, concerning whether EMPs differentiate directly from the endothelium or merely pass through. We provide the first evidence in vivo that EMPs can emerge directly from endothelial cells (ECs) and demonstrate a role for these cells in vascular development. We find that EMPs express most EC markers but late EMPs and EMP-derived cells do not take up acetylated low-density lipoprotein (AcLDL), as ECs do. When the endothelium is labelled with AcLDL before EMPs differentiate, EMPs and EMP-derived cells arise that are AcLDL+. If AcLDL is injected after the onset of EMP differentiation, however, the majority of EMP-derived cells are not double labelled. We find that cell division precedes entry of EMPs into circulation, and that blood flow facilitates the transition of EMPs from the endothelium into circulation in a nitric oxide-dependent manner. In gain-of-function studies, we inject the CSF1-Fc ligand in embryos and found that this increases the number of CSF1R+cells, which localize to the venous plexus and significantly disrupt venous remodeling. This is the first study to definitively establish that EMPs arise from the endothelium in vivo and show a role for early myeloid cells in vascular development.