Introduction Controlling the formation of blood and lymphatic vasculatures is crucial for engineered tissues. Although the lymphatic vessels originate from embryonic blood vessels, the two retain functional and physiological differences even as they develop in the vicinity of each other. This suggests that there is a previously unknown molecular mechanism by which blood (BECs) and lymphatic endothelial cells (LECs) recognize each other and coordinate to generate distinct capillary networks. Methods We utilized Matrigel and fibrin assays to determine how cord-like structures (CLS) can be controlled by altering LEC and BEC identity through podoplanin (PDPN) and folliculin (FLCN) expressions. We generated BECΔFLCN and LECΔPDPN, and observed cell migration to characterize loss lymphatic and blood characteristics due to respective knockouts. Results We observed that LECs and BECs form distinct CLS in Matrigel and fibrin gels despite being cultured in close proximity with each other. We confirmed that the LECs and BECs do not recognize each other through paracrine signaling, as proliferation and migration of both cells were unaffected by paracrine signals. On the other hand, we found PDPN to be the key surface protein that is responsible for LEC-BEC recognition, and LECs lacking PDPN became pseudo-BECs and vice versa. We also found that FLCN maintains BEC identity through downregulation of PDPN. Conclusions Overall, these observations reveal a new molecular pathway through which LECs and BECs form distinct CLS through physical contact by PDPN which in turn is regulated by FLCN, which has important implications toward designing functional engineered tissues.