During embryogenesis, complex morphogenetic events lead endodermal cells to coalesce at the midline and form the primitive gut tube and associated organs. While several genes have recently been implicated in endoderm differentiation, we know little about the genes that regulate endodermal morphogenesis. Here, we show that vascular endothelial growth factor C (Vegfc), an angiogenic as well as a lymphangiogenic factor, is unexpectedly involved in this process in zebrafish. Reducing Vegfc levels using morpholino antisense oligonucleotides, or through overexpression of a soluble form of the VEGFC receptor, VEGFR-3, affects the coalescence of endodermal cells in the anterior midline, leading to the formation of a forked gut tube and the duplication of the liver and pancreatic buds. Further analyses indicate that Vegfc is additionally required for the initial formation of the dorsal endoderm. We also demonstrate that Vegfc is required for vasculogenesis as well as angiogenesis in the zebrafish embryo. These data argue for a requirement of Vegfc in the developing vasculature and, more surprisingly, implicate Vegfc signalling in two distinct steps during endoderm development, first during the initial differentiation of the dorsal endoderm, and second in the coalescence of the anterior endoderm to the midline.