Sprouting angiogenesis drives blood vessel growth in healthy and diseased tissues. Vegf and Dll4/Notch signalling cooperate in a negative feedback loop that specifies endothelial tip and stalk cells to ensure adequate vessel branching and function. Current concepts posit that endothelial cells default to the tip-cell phenotype when Notch is inactive. Here we identify instead that the stalk-cell phenotype needs to be actively repressed to allow tip-cell formation. We show this is a key endothelial function of neuropilin-1 (Nrp1), which suppresses the stalk-cell phenotype by limiting Smad2/3 activation through Alk1 and Alk5. Notch downregulates Nrp1, thus relieving the inhibition of Alk1 and Alk5, thereby driving stalk-cell behaviour. Conceptually, our work shows that the heterogeneity between neighbouring endothelial cells established by the lateral feedback loop of Dll4/Notch utilizes Nrp1 levels as the pivot, which in turn establishes differential responsiveness to TGF-β/BMP signalling.