Hematopoietic stem cells are at the top of a hierarchy that regulates the generation of a vast repertoire of blood cells during the lifetime of a vertebrate. Recent experiments, using a vast variety of embryonic systems, shed new light on the origin of stem cells and the genes that function to regulate and maintain hematopoietic differentiation programs. Two distinct populations of stem cells develop--derived initially from transient, extraembryonic source and later from a stable, intraembryonic source; it is possible that both are generated from a pro-HSC able to respond differentially to local inductions. The initial blood cells develop from ventral mesoderm. The blood-forming region develops as a result of signaling from specific, secreted, embryonic growth factors, including the bone morphogenetic proteins. Stem cells give rise to progenitors that are restricted progressively in their ability to contribute to specific lineages. This process is regulated by transcription factors, whose functions are confirmed through genetic analyses. The identification of highly conserved, embryonic signaling pathways and transcription regulatory genes illustrates the enormous utility of analyzing embryonic hematopoiesis in frog, chick, fish, and mouse systems to further our understanding of human stem cells.