Key points Combining nitric oxide (NO)‐mediated increased blood flow with angiopoietin‐1–Tie2 receptor signalling induces arteriolargenesis – the formation of arterioles from capillaries – in a model of physiological angiogenesis. This NO–Tie‐mediated arteriolargenesis requires endogenous vascular endothelial growth factor (VEGF) signalling. Inhibition of VEGF signalling increases pericyte coverage in microvessels. Together these findings indicate that generation of functional neovasculature requires close titration of NO–Tie2 signalling and localized VEGF induction, suggesting that the use of exogenous VEGF expression as a therapeutic for neovascularization may not be successful. Abstract Signalling through vascular endothelial growth factor (VEGF) receptors and the tyrosine kinase with IgG and EGF domains‐2 (Tie2) receptor by angiopoietins is required in combination with blood flow for the formation of a functional vascular network. We tested the hypothesis that VEGF and angiopoietin‐1 (Ang1) contribute differentially to neovascularization induced by nitric oxide (NO)‐mediated vasodilatation, by comparing the phenotype of new microvessels in the mesentery during induction of vascular remodelling by over‐expression of endothelial nitric oxide synthase in the fat pad of the adult rat mesentery during inhibition of angiopoietin signalling with soluble Tie2 (sTie2) and VEGF signalling with soluble Fms‐like tyrosine kinase receptor‐1 (sFlt1). We found that NO‐mediated angiogenesis was blocked by inhibition of VEGF with sFlt1 (from 881 ± 98% increase in functional vessel area to 279 ± 72%) and by inhibition of angiopoietin with sTie2 (to 337 ± 67%). Exogenous angiopoietin‐1 was required to induce arteriolargenesis (8.6 ± 1.3% of vessels with recruitment of vascular smooth muscle cells; VSMCs) in the presence of enhanced flow. sTie2 and sFlt1 both inhibited VSMC recruitment (both 0%), and VEGF inhibition increased pericyte recruitment to newly formed vessels (from 27 ± 2 to 54 ± 3% pericyte ensheathment). We demonstrate that a fine balance of VEGF and angiopoietin signalling is required for the formation of a functional vascular network. Endogenous VEGF signalling prevents excess neovessel pericyte coverage, and is required for VSMC recruitment during increased nitric oxide‐mediated vasodilatation and angiopoietin signalling (NO–Tie‐mediated arteriogenesis). Therapeutic vascular remodelling paradigms may therefore require treatments that modulate blood flow to utilize endogenous VEGF, in combination with exogenous Ang1, for effective neovascularization.