Endothelial cells, both microvascular as well as large vessel, undergo differentiation slowly in culture under most conditions. When endothelial cells are cultured on Matrigel, a solid gel of basement membrane proteins, they rapidly align and form hollow tube-like structures. We show here that tube formation is a multi-step process induced by laminin. An RGD-containing sequence in the A chain of laminin through an integrin receptor on the endothelial cell induces their attachment to the protein while a YIGSR site in the B1 chain induces cell-cell interactions and the resulting tube formation. We also show that the laminin-derived synthetic peptide YIGSR contains sufficient information to induce single endothelial cells to form ring-like structures surrounding a hollow lumen, the basic putative unit in the formation of capillaries.