Diabetes mellitus (DM) during pregnancy has long‐lasting implications for the fetus, including cardiovascular morbidity. Previously, we showed that endothelial colony forming cells (ECFCs) from DM human pregnancies have decreased vasculogenic potential. Here, we evaluate whether the molecular mechanism responsible for this phenotype involves the transcription factor, Mesenchyme Homeobox 2 (MEOX2). In human umbilical vein endothelial cells, MEOX2 upregulates cyclin‐dependent kinase inhibitor expression, resulting in increased senescence and decreased proliferation. We hypothesized that dysregulated MEOX2 expression in neonatal ECFCs from DM pregnancies decreases network formation through increased senescence and altered cell cycle progression. Our studies show that nuclear MEOX2 is increased in ECFCs from DM pregnancies. To determine if MEOX2 is sufficient and/or required to induce impaired network formation, MEOX2 was overexpressed and depleted in ECFCs from control and DM pregnancies, respectively. Surprisingly, MEOX2 overexpression in control ECFCs resulted in increased network formation, altered cell cycle progression, and increased senescence. In contrast, MEOX2 knockdown in ECFCs from DM pregnancies led to decreased network formation, while cell cycle progression and senescence were unaffected. Importantly, migration studies demonstrated that MEOX2 overexpression increased migration, while MEOX2 knockdown decreased migration. Taken together, these data suggest that altered migration may be mediating the impaired vasculogenesis of ECFCs from DM pregnancies. While initially believed to be maladaptive, these data suggest that MEOX2 may serve a protective role, enabling increased vessel formation despite exposure to a DM intrauterine environment. J. Cell. Physiol. 232: 1885–1892, 2017. © 2016 Wiley Periodicals, Inc. Endothelial colony forming cells (ECFCs) from diabetic human pregnancies have decreased vasculogenic potential both in vitro and in vivo. The goal of this study was to evaluate whether the molecular mechanism responsible for this phenotype involves the transcription factor, Mesenchyme Homeobox 2 (MEOX2). While initially believed to be maladaptive, these data suggest that MEOX2 may serve a protective role, enabling increased vessel formation despite exposure to a DM intrauterine environment.