The current paradigm in engineering course instruction builds on a lecture prerequisite structure but ignores the need for a laboratory prerequisite structure. Educational quality is therefore diminished as instructors optimize specific laboratories but fail to optimize the overall program laboratory experience. This paper presents a learning environment based on modern instrumentation that forces students to use not only concepts and skills acquired from the lecture, but also actual data and models acquired from lower division laboratories, in upper division laboratories. The vertical integration occurs because students must utilize their previous laboratory work as a reference and/or building blocks as they study the different facets of the same experimental set-ups in multiple engineering laboratories. The students learn to appreciate the integrated nature of modern systems since they get to use the same set-ups in multiple courses. Set-ups such as the inverted pendulum, mobile robot, a model airplane, a model train and a wind tunnel make heavy use of data-acquisition systems, programs written and developed in LabVIEW and MATLAB, and modern communication protocols such as RS485. The entire interface is through virtual instrumentation, and the lab is also being given the capability of remote access to the students. There are other indirect advantages of this approach in terms of financial economy and faculty professional development. This project has been funded by the National Science Foundation (NSF) and has resulted in the development of the Integrated Systems Engineering Laboratory (ISEL) that houses vertically integrated laboratory exercises for twelve courses from three different curricula.