Endochondral ossification requires coordinated mobilization of osteoblast precursors with blood vessels. During adult bone homeostasis, vessel adjacent osteoblast precursors respond to and are maintained by mechanical stimuli; however, the mechanisms by which these cells mobilize and respond to mechanical cues during embryonic development are unknown. Previously, we found that deletion of the mechanoresponsive transcriptional regulators, YAP and TAZ, from Osterix-expressing osteoblast precursors and their progeny caused perinatal lethality. Here, we show that embryonic YAP/TAZ signaling couples vessel-associated osteoblast precursor mobilization to angiogenesis in developing long bones. Osterix-conditional YAP/TAZ deletion impaired endochondral ossification in the primary ossification center but not intramembranous osteogenesis in the bone collar. Single-cell RNA sequencing revealed YAP/TAZ regulation of the angiogenic chemokine, Cxcl12, which was expressed uniquely in vessel-associated osteoblast precursors. YAP/TAZ signaling spatially coupled osteoblast precursors to blood vessels and regulated vascular morphogenesis and vessel barrier function. Further, YAP/TAZ signaling regulated vascular loop morphogenesis at the chondro-osseous junction to control hypertrophic growth plate remodeling. In human cells, mesenchymal stromal cell co-culture promoted 3D vascular network formation, which was impaired by stromal cell YAP/TAZ depletion, but rescued by recombinant CXCL12 treatment. Lastly, YAP and TAZ mediated mechanotransduction for load-induced osteogenesis in embryonic bone.