In response to hypoxia, hypoxia-inducible factors act as the primary proangiogenic triggers by regulating transcription levels of target genes, including VEGF. However, little is known about the specific factors that control other components of the angiogenic process, particularly formation of matrix scaffolds that promote adhesion and migration of endothelial cells. We show that in the postnatal mouse retina, the orphan nuclear receptor tailless (Tlx) is strongly expressed in the proangiogenic astrocytes, which secrete VEGF and fibronectin. Tlx expression by retinal astrocytes is controlled by oxygen concentration and rapidly downregulated upon contact with blood vessels. In mice null for Tlx, retinal astrocytes maintain VEGF expression; however, the extracellular assembly of fibronectin matrices by astrocytes is severely impaired, leading to defective scaffold formation and a complete failure of normal retinal vascular development. This work identifies Tlx as an essential component of the molecular network involved in the hypoxia-inducible proangiogenic switch in retinal astrocytes.