Human induced pluripotent stem cells (hiPSCs) possess the potential to differentiate toward vascular cells including endothelial cells (ECs), pericytes, and smooth muscle cells. Epigenetic mechanisms including DNA methylation and histone modification play a crucial role in regulating lineage differentiation and specification. Herein, we utilized a three‐stage protocol to induce differentiation of mesoderm, vascular progenitors, and ECs from hiPSCs and investigated the regulatory effects of histone acetylation on the differentiation processes. We found that the expression of several histone deacetylases (HDACs), including HDAC1, HDAC5, and HDAC7, were greatly upregulated at the second stage and downregulated at the third stage. Interestingly, although HDAC1 remained in the nucleus during the EC differentiation, HDAC5 and HDAC7 displayed cytosol/nuclear translocation during the differentiation process. Inhibition of HDACs with sodium butyrate (NaBt) or BML210 could hinder the differentiation of vascular progenitors at the second stage and facilitate EC induction at the third stage. Further investigation revealed that HDAC may modulate the stepwise EC differentiation via regulating the expression of endothelial transcription factors ERG, ETS1, and MEF2C. Opposite to the expression of EC markers, the smooth muscle/pericyte marker ACTA2 was upregulated at the second stage and downregulated at the third stage by NaBt. The stage‐specific regulation of ACTA2 by HDAC inhibition was likely through regulating the expression of TGFβ2 and PDGFB. This study suggests that HDACs play different roles at different stages of EC induction by promoting the commitment of vascular progenitors and impeding the later stage differentiation of ECs.