In this study, we report that OVOL2, a C2H2zinc finger protein, is a novel binding protein of ER71, which is a critical transcription factor for blood and vessel development. OVOL2 directly interacted with ER71, but not with ETS1 or ETS2, in the nucleus. ER71-mediated activation of the Flk1 promoter was further enhanced by OVOL2, although OVOL2 alone failed to activate it. Consistently, coexpression of ER71 and OVOL2 in differentiating embryonicstem cells ledtoasignificant augmentation of FLK1+, endothelial, and hematopoietic cells. Such cooperative effects were impaired by the short hairpin RNA-mediated inhibition of Ovol2. Collectively, weshow that ER71 directly interacts with OVOL2 and that such interaction is critical for FLK1+ cell generation and their differentiation into downstream cell lineages.