Transcriptional enhancer elements are responsible for orchestrating the temporal and spatial control over gene expression that is crucial for programming cell identity during development. Here we describe a novel enhancer element that is important for regulating the expression of Prox1 in lymphatic endothelial cells. This evolutionarily conserved enhancer is bound by key lymphatic transcriptional regulators including GATA2, FOXC2, NFATC1 and PROX1. Genome editing of the enhancer to remove five nucleotides encompassing the GATA2-binding site resulted in perinatal death of homozygous mutant mice due to profound lymphatic vascular defects. Lymphatic endothelial cells in enhancer mutant mice exhibited reduced expression of genes characteristic of lymphatic endothelial cell identity and increased expression of genes characteristic of haemogenic endothelium, and acquired the capacity to generate haematopoietic cells. These data not only reveal a transcriptional enhancer element important for regulating Prox1 expression and lymphatic endothelial cell identity but also demonstrate that the lymphatic endothelium has haemogenic capacity, ordinarily repressed by Prox1.