Reactive oxygen species (ROS) have a crucial role in stem-cell differentiation; however, the mechanisms by which ROS regulate the differentiation of stem cells into endothelial cells (ECs) are unknown. Here, we determine the role of ROS produced by NADPH oxidase 2 (Nox2) in the endothelial-lineage specification of mouse induced-pluripotent stem cells (miPSCs). When wild-type (WT) and Nox2-knockout (Nox2-/-) miPSCs were differentiated into ECs (miPSC-ECs), the expression of endothelial markers, arterial endothelial markers, pro-angiogenic cytokines, and Notch pathway components was suppressed in the Nox2-/- cells but increased in both WT and Nox2-/- miPSCs when Nox2 expression was upregulated. Higher levels of Nox2 expression increased Notch signaling and arterial EC differentiation, and this increase was abolished by the inhibition of ROS generation or by the silencing of Notch1 expression. Nox2 deficiency was associated with declines in the survival and angiogenic potency of miPSC-ECs, and capillary and arterial density were lower in the ischemic limbs of mice after treatment with Nox2-/- miPSC-ECs than WT miPSC-EC treatment. Taken together, these observations indicate that Nox2-mediated ROS production promotes arterial EC specification in differentiating miPSCs by activating the Notch signaling pathway and contributes to the angiogenic potency of transplanted miPSC-derived ECs.