The vascular system in plants, which comprises xylem, phloem and vascular stem cells, originates from provascular cells and forms a continuous network throughout the plant body. Although various aspects of vascular development have been extensively studied, the early process of vascular development remains largely unknown. LONESOME HIGHWAY (LHW), which encodes an atypical basic helix–loop–helix (bHLH) transcription factor, plays an essential role in establishing vascular cells. Here, we report the analysis of LHW homologs in relation to vascular development. Three LHW homologs, LONESOME HIGHWAY LIKE 1–3 (LHL1–LHL3), were preferentially expressed in the plant vasculature. Genetic analysis indicated that, although the LHL3 loss-of-function mutant showed no obvious phenotype, the lhw lhl3 double mutant displayed more severe phenotypic defects in the vasculature of the cotyledons and roots than the lhw single mutant. Only one xylem vessel was formed at the metaxylem position in lhw lhl3 roots, whereas the lhw root formed one protoxylem and one or two metaxylem vessels. Conversely, overexpression of LHL3 enhanced xylem development in the roots. Moreover, N-1-naphthylphthalamic acid caused ectopic LHL3 expression in accordance with induced auxin maximum. These results suggest that LHL3 plays a positive role in xylem differentiation downstream of auxin.