The endothelial receptor tyrosine kinase (RTK) Tie1 was discovered over 20 years ago, yet its precise function and mode of action remain enigmatic. To shed light on Tie1’s role in endothelial cell biology, we investigated a potential threonine phosphorylation site within the juxtamembrane domain of Tie1. Expression of a non-phosphorylatable mutant of this site (T794A) in zebrafish (Danio rerio) significantly disrupted vascular development, resulting in fish with stunted and poorly branched intersomitic vessels. Similarly, T794A-expressing human umbilical vein endothelial cells formed significantly shorter tubes with fewer branches in three-dimensional Matrigel cultures. However, mutation of T794 did not alter Tie1 or Tie2 tyrosine phosphorylation or downstream signaling in any detectable way, suggesting that T794 phosphorylation may regulate a Tie1 function independent of its activity as a kinase. Although T794 is within a consensus Akt phosphorylation site, we were unable to identify a physiological activator of Akt that could induce T794 phosphorylation, suggesting that Akt is not the physiological Tie1-T794 kinase. However, the small GTPase Ras-related C3 botulinum toxin substrate 1 (Rac1), which is required for angiogenesis and capillary morphogenesis, was found to associate with phospho-T794 but not the non-phosphorylatable T794A mutant. Pharmacological activation of Rac1 induced downstream activation of p21-activated kinase (PAK1) and T794 phosphorylation in vitro, and inhibition of PAK1 abrogated T794 phosphorylation. Our results provide the first demonstration of a signaling pathway mediated by Tie1 in endothelial cells, and they suggest that a novel feedback loop involving Rac1/PAK1-mediated phosphorylation of Tie1 on T794 is required for proper angiogenesis.