Abstract: The in vitro differentiation of embryonic stem (ES) cells provides a powerful approach for studying the earliest events involved in the commitment of the hematopoietic and endothelial lineages. Using this model system, we have identified a precursor with the potential to generate both primitive and definitive hematopoietic cells as well as cells with endothelial characteristics. The developmental potential of this precursor suggests that it represents the in vitro equivalent of the hemangioblast, a common stem cell for both lineages. ES cells deficient for the transcription factor scl/tal-1 are unable to generate hemangioblasts, while those deficient for Runx1 generate reduced numbers of these precursors. These findings indicate that both genes play pivotal roles at the earliest stages of hematopoietic and endothelial development. In addition, they highlight the strength of this model system in studying the function of genes in embryonic development.