Venous malformations (VMs), the most common errors of vascular morphogenesis in humans, are composed of dilated, serpiginous channels. The walls of the channels have a variable thickness of smooth muscle; some mural regions lack smooth muscle altogether. A missense mutation resulting in an arginine-to-tryptophan substitution at position 849 in the kinase domain of the receptor tyrosine kinase TIE2 segregates with dominantly inherited VM in two unrelated families. Using proteins expressed in insect cells, we demonstrate that the mutation results in increased activity of TIE2. We conclude that an activating mutation in TIE2 causes inherited VMs in the two families and that the TIE2 signaling pathway is critical for endothelial cell-smooth muscle cell communication in venous morphogenesis.