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Vascular endothelial growth factor (VEGF-A) is a major pathogenic factor and a therapeutic target for age-related macular degeneration, diabetic retinopathy, and retinopathy of prematurity. Despite intensive effort in the field, the cellular mechanisms of VEGF action remain virtually uninvestigated. This situation makes it difficult to design cellular target-based therapeutics for these diseases. In light of the recent finding that VEGF is a potential neurotrophic factor, revealing the cellular mechanisms of VEGF action becomes necessary to preserve its beneficial effect and inhibit its pathological function in long-term anti-VEGF therapeutics for ocular vascular diseases. We therefore generated conditional VEGF knockout mice with an inducible Cre/lox system and determined the significance of Müller cell-derived VEGF in retinal development and maintenance and ischaemia-induced neovascularizartion and vascular leakage. Retinal development in the conditional VEGF knockout mice was analysed by examining retinal and choroidal vasculatures and retinal morphology and function. Ischaemia-induced retinal neovascularization and vascular leakage in the conditional VEGF knockout mice were analysed with fluorescein angiography, quantification of proliferative neovascular cells, immunohistochemistry, and immunoblotting using an oxygen-induced retinopathy model. Our results demonstrated that disruption of Müller cell-derived VEGF resulted in no apparent defects in retinal and choroidal vasculatures and retinal morphology and function, significant inhibition of the ischaemia-induced retinal neovascularization and vascular leakage, and attenuation of the ischaemia-induced breakdown of the blood-retina barrier. These results suggest that the retinal Müller cell-derived VEGF is a major contributor to ischaemia-induced retinal vascular leakage and pre-retinal and intra-retinal neovascularization. The observation that a significant, but not complete, reduction of VEGF in the retina does not cause detectable retinal degeneration suggests that appropriate doses of anti-VEGF agents may be important to the safe treatment of retinal vascular diseases.