The ability to generate and maintain stable in vitro cultures of mouse endothelial cells (ECs) has great potential for genetic dissection of the numerous pathologies involving vascular dysfunction as well as therapeutic applications. However, previous efforts at achieving sustained cultures of primary stable murine vascular cells have fallen short, and the cellular requirements for EC maintenance in vitro remain undefined. In this study, we have generated vascular ECs from mouse embryonic stem (ES) cells and show that active Akt is essential to their survival and propagation as homogeneous monolayers in vitro. These cells harbor the phenotypical, biochemical, and functional characteristics of ECs and expand throughout long-term cultures, while maintaining their angiogenic capacity. Moreover, Akt-transduced embryonic ECs form functional perfused vessels in vivo that anastomose with host blood vessels. We provide evidence for a novel function of Akt in stabilizing EC identity, whereby the activated form of the protein protects mouse ES cell-derived ECs from TGFβ-mediated transdifferentiation by downregulating SMAD3. These findings identify a role for Akt in regulating the developmental potential of ES cell-derived ECs and demonstrate that active Akt maintains endothelial identity in embryonic ECs by interfering with active TGFβ-mediated processes that would ordinarily usher these cells to alternate fates.