HYPB is a human histone H3 lysine 36 (H3K36)–specific methyltransferase and acts as the ortholog of yeast Set2. This study explored the physiological function of mammalian HYPB using knockout mice. Homozygous disruption of Hypb impaired H3K36 trimethylation but not mono- or dimethylation, and resulted in embryonic lethality at E10.5-E11.5. Severe vascular defects were observed in the Hypb ^−/− embryo, yolk sac, and placenta. The abnormally dilated capillaries in mutant embryos and yolk sacs could not be remodeled into large blood vessels or intricate networks, and the aberrantly rounded mesodermal cells exhibited weakened interaction with endothelial cells. The embryonic vessels failed to invade the labyrinthine layer of placenta, which impaired the embryonic–maternal vascular connection. These defects could not be rescued by wild-type tetraploid blastocysts, excluding the possibility that they were caused by the extraembryonic tissues. Consistent with these phenotypes, gene expression profiling in wild-type and Hypb ^−/− yolk sacs revealed that the Hypb disruption altered the expression of some genes involved in vascular remodeling. At the cellular level, Hypb ^−/− embryonic stem cell–derived embryonic bodies, as well as in vitro–cultured human endothelial cells with siRNA-mediated suppression of HYPB, showed obvious defects in cell migration and invasion during vessel formation, suggesting an intrinsic role of Hypb in vascular development. Taken together, these results indicate that Hypb is required for embryonic vascular remodeling and provide a tool to study the function of H3K36 methylation in vasculogenesis/angiogenesis.