Description: Objective— In diabetics, hyperglycemia results in deficient endothelial progenitors and cells, leading to cardiovascular complications. We aim to engineer 3-dimensional (3D) vascular networks in synthetic hydrogels from type 1 diabetes mellitus (T1D) patient–derived human-induced pluripotent stem cells (hiPSCs), to serve as a transformative autologous vascular therapy for diabetic patients. Approach and Results— We validated and optimized an adherent, feeder-free differentiation procedure to derive early vascular cells (EVCs) with high portions of vascular endothelial cadherin-positive cells from hiPSCs. We demonstrate similar differentiation efficiency from hiPSCs derived from healthy donor and patients with T1D. T1D-hiPSC–derived vascular endothelial cadherin-positive cells can mature to functional endothelial cells–expressing mature markers: von Willebrand factor and endothelial nitric oxide synthase are capable of lectin binding and acetylated low-density lipoprotein uptake, form cords in Matrigel and respond to tumor necrosis factor-α. When embedded in engineered hyaluronic acid hydrogels, T1D-EVCs undergo morphogenesis and assemble into 3D networks. When encapsulated in a novel hypoxia-inducible hydrogel, T1D-EVCs respond to low oxygen and form 3D networks. As xenografts, T1D-EVCs incorporate into developing zebrafish vasculature. Conclusions— Using our robust protocol, we can direct efficient differentiation of T1D-hiPSC to EVCs. Early endothelial cells derived from T1D-hiPSC are functional when mature. T1D-EVCs self-assembled into 3D networks when embedded in hyaluronic acid and hypoxia-inducible hydrogels. The capability of T1D-EVCs to assemble into 3D networks in engineered matrices and to respond to a hypoxic microenvironment is a significant advancement for autologous vascular therapy in diabetic patients and has broad importance for tissue engineering.