During development, the lymphatic vasculature forms as a second network derived chiefly from blood vessels. The transdifferentiation of embryonic venous endothelial cells (VECs) into lymphatic endothelial cells (LECs) is a key step in this process. Specification, differentiation and maintenance of LEC fate are all driven by thetranscription factor Prox1, yet the downstream mechanisms remain to be elucidated. We here present a single-cell transcriptomic atlas of lymphangiogenesis in zebrafish, revealing new markers and hallmarks of LEC differentiation over four developmental stages. We further profile single-cell transcriptomic and chromatin accessibility changes in zygotic prox1a mutants that are undergoing a LEC-VEC fate shift. Using maternal and zygotic prox1a/prox1b mutants, we determine the earliest transcriptomic changes directed by Prox1 during LEC specification. This work altogether reveals new downstream targets and regulatory regions of the genome controlled by Prox1 and presents evidence that Prox1 specifies LEC fate primarily by limiting blood vascular and haematopoietic fate. This extensive single-cell resource provides new mechanistic insights into the enigmatic role of Prox1 and the control of LEC differentiation in development.