The coxsackie- and adenovirus receptor (CAR) is a cell adhesion molecule predominantly associated with epithelial tight junctions in adult tissues. CAR is also expressed in cardiomyocytes and essential for heart development up to embryonic day 11.5, but not thereafter. CAR is not expressed in vascular endothelial cells but was recently detected in neonatal lymphatic vessels, suggesting that CAR could play a role in the development of the lymphatic system. To address this, we generated mice carrying a conditional deletion of the CAR gene (Cxadr) and knocked out CAR in the mouse embryo at different time points during post-cardiac development. Deletion of Cxadr from E12.5, but not from E13.5, resulted in subcutaneous edema, hemorrhage and embryonic death. Subcutaneous lymphatic vessels were dilated and structurally abnormal with gaps and holes present at lymphatic endothelial cell-cell junctions. Furthermore, lymphatic vessels were filled with erythrocytes showing a defect in the separation between the blood and lymphatic systems. Regionally, erythrocytes leaked out into the interstitium from leaky lymphatic vessels explaining the hemorrhage detected in CAR-deficient mouse embryos. The results show that CAR plays an essential role in development of the lymphatic vasculature in the mouse embryo by promoting appropriate formation of lymphatic endothelial cell-cell junctions.