Human endothelial cells (ECs) and pericytes are of great interest for research on vascular development and disease, as well as for future therapy. This protocol describes the efficient generation of ECs and pericytes from human pluripotent stem cells (hPSCs) under defined conditions. Essential steps for hPSC culture, differentiation, isolation and functional characterization of ECs and pericytes are described. Substantial numbers of both cell types can be derived in only 2-3 weeks: this involves differentiation (10 d), isolation (1 d) and 4 or 10 d of expansion of ECs and pericytes, respectively. We also describe two assays for functional evaluation of hPSC-derived ECs: (i) primary vascular plexus formation upon coculture with hPSC-derived pericytes and (ii) incorporation in the vasculature of zebrafish xenografts in vivo. These assays can be used to test the quality and drug sensitivity of hPSC-derived ECs and model vascular diseases with patient-derived hPSCs.