Infantile hemangioma (IH) is a common childhood vascular tumor. Although benign, some hemangiomas cause deformation and destruction of features or endanger life. The current treatments, corticosteroid or propranolol, are administered for several months and can have adverse effects on the infant. We designed a high-throughput screen to identify the Food and Drug Administration-approved drugs that could be used to treat this tumor. Rapamycin, an mTOR (mammalian target of Rapamycin) inhibitor, was identified, based on its ability to inhibit proliferation of a hemangioma-derived stem cell population, human vasculogenic cells, which we had previously discovered. In vitro and in vivo studies show that Rapamycin reduces the self-renewal capacity of the hemangioma stem cells, diminishes differentiation potential, and inhibits the vasculogenic activity of these cells in vivo. Longitudinal in vivo imaging of blood flow through vessels formed with hemangioma stem cells shows that Rapamycin also leads to regression of hemangioma blood vessels, consistent with its known anti-angiogenic activity. Finally, we demonstrate that Rapamycin-induced loss of stemness can work in concert with corticosteroid, the current standard therapy for problematic hemangioma, to block hemangioma formation in vivo. Our studies reveal that Rapamycin targets the self-renewal and vascular differentiation potential in patient-derived hemangioma stem cells, and suggests a novel therapeutic strategy to prevent formation of this disfiguring and endangering childhood tumor.