Alagille syndrome (AGS), which is caused by mutations in the Notch ligand jagged 1 (JAG1), is characterized by defective intrahepatic bile duct (IHBD) formation, but the mechanistic origins of this defect have been unclear. Now, on p. 4061, Luisa Iruela-Arispe and colleagues report that the conditional inactivation of Jag1 specifically in the developing portal vein mesenchyme (PVM), and not in the PV endothelium, of mice gives rise to AGS-like liver defects. They demonstrate that loss of Jag1 from the PVM leads to defective IHBD morphogenesis. Cytokeratin-positive bilary epithelial cells (BECs) surround the portal vein of these mice, indicating that their initial specification is Jag1 independent, but these cells fail to develop into mature bile ducts. Using in vitro spheroid co-cultures of isolated BECs and PVM, the authors show that loss of Jag1 from the PVM inhibits BEC aggregation, demonstrating that the PVM is a vital source of Jag1 signalling during BEC morphogenesis. The authors, thus, propose that the developing vasculature provides instructive signals for liver morphogenesis.