• Versican- and hyaluronan-deficient mouse mutants fail to form yolk sac vasculature and blood. • Mouse embryonic stem cells with CRISPR-Cas9 Vcan mutation have impaired angiogenesis and hematopoiesis. • The versican-hyaluronan complex is strongly associated with emerging Flk1+ hematoendothelial precursors. • Versican and hyaluronan are each destabilized by the absence of the other. • The versican chondroitin sulfate chains sequester vasculogenic factors VEGF and Indian Hedgehog. Little is known about extracellular matrix (ECM) contributions to formation of the earliest cell lineages in the embryo. Here, we show that the proteoglycan versican and glycosaminoglycan hyaluronan are associated with emerging Flk1+ hematoendothelial progenitors at gastrulation. The mouse versican mutant Vcan hdf lacks yolk sac vasculature, with attenuated yolk sac hematopoiesis. CRISPR/Cas9-mediated Vcan inactivation in mouse embryonic stem cells reduced vascular endothelial and hematopoietic differentiation within embryoid bodies, which generated fewer blood colonies, and had an impaired angiogenic response to VEGF 165. Hyaluronan was severely depleted in Vcan hdf embryos, with corresponding upregulation of the hyaluronan-depolymerase TMEM2. Conversely, hyaluronan-deficient mouse embryos also had vasculogenic suppression but with increased versican proteolysis. VEGF 165 and Indian hedgehog, crucial vasculogenic factors, utilized the versican-hyaluronan matrix, specifically versican chondroitin sulfate chains, for binding. Versican-hyaluronan ECM is thus an obligate requirement for vasculogenesis and primitive hematopoiesis, providing a vasculogenic factor-enriching microniche for Flk1+ progenitors from their origin at gastrulation. [ABSTRACT FROM AUTHOR]