Coordinated activity of VEGF and Notch signals guides the endothelial cell (EC) specification into tip and stalk cells during angiogenesis. Notch activation in stalk cells leads to proliferation arrest via an unknown mechanism. By using gain- and loss-of-function gene-targeting approaches, here we show that PTEN is crucial for blocking stalk cell proliferation downstream of Notch, and this is critical for mouse vessel development. Endothelial deletion of PTEN results in vascular hyperplasia due to a failure to mediate Notch-induced proliferation arrest. Conversely, overexpression of PTEN reduces vascular density and abrogates the increase in EC proliferation induced by Notch blockade. PTEN is a lipid/protein phosphatase that also has nuclear phosphatase-independent functions. We show that both the catalytic and non-catalytic APC/C-Fzr1/Cdh1-mediated activities of PTEN are required for stalk cells’ proliferative arrest. These findings define a Notch–PTEN signalling axis as an orchestrator of vessel density and implicate the PTEN-APC/C-Fzr1/Cdh1 hub in angiogenesis.