Insulin-like growth factor binding protein-2 (IGFBP-2) is an evolutionarily conserved protein that binds insulin-like growth factors (IGFs), and modulates their biological activities. While the actions of IGFBP-2 have been well studied in vitro, we have a poor understanding of its in vivo functions, particularly during early development. Using the transparent zebrafish embryo as a model, we show that IGFBP-2 mRNA is expressed in lens epithelium and cranial boundary regions during early embryonic development, and becomes localized to the liver by the completion of embryogenesis. Targeted knockdown of IGFBP-2 by antisense morpholino-modified oligonucleotides resulted in delayed development, reduced body growth, reduced IGF-I mRNA levels, and disruptions to cardiovascular development, including hypochromic anemia, reduced blood circulation, cardiac dysfunction, and brain ventricle edema. Detailed examination of vascular tissues, using a stable transgenic line of zebrafish expressing green fluorescent protein in vascular endothelial cells, revealed specific angiogenic (vessel sprouting) defects in IGFBP-2 knockdown embryos, with effects being localized in regions associated with IGFBP-2 mRNA expression. These findings suggest that IGFBP-2 is required for general embryonic development and growth, and plays a local role in regulating vascular development in a model vertebrate organism.