In this study, we have mapped the onset of hematopoietic development in the mouse embryo using colony-forming progenitor assays and PCR-based gene expression analysis. With this approach, we demonstrate that commitment of embryonic cells to hematopoietic fates begins in proximal regions of the egg cylinder at the mid-primitive streak stage (E7.0) with the simultaneous appearance of primitive erythroid and macrophage progenitors. Development of these progenitors was associated with the expression of SCL/tal-1 and GATA-1, genes known to be involved in the development and maturation of the hematopoietic system. Kinetic analysis revealed the transient nature of the primitive erythroid lineage, as progenitors increased in number in the developing yolk sac until early somite-pair stages of development (E8.25) and then declined sharply to undetectable levels by 20 somite pairs (E9.0). Primitive erythroid progenitors were not detected in any other tissue at any stage of embryonic development. The early wave of primitive erythropoiesis was followed by the appearance of definitive erythroid progenitors (BFU-E) that were first detectable at 1–7 somite pairs (E8.25) exclusively within the yolk sac. The appearance of BFU-E was followed by the development of later stage definitive erythroid (CFU-E), mast cell and bipotential granulocyte/macrophage progenitors in the yolk sac. C-myb, a gene essential for definitive hematopoiesis, was expressed at low levels in the yolk sac just prior to and during the early development of these definitive erythroid progenitors. All hematopoietic activity was localized to the yolk sac until circulation was established (E8.5) at which time progenitors from all lineages were detected in the bloodstream and subsequently in the fetal liver following its development. This pattern of development suggests that definitive hematopoietic progenitors arise in the yolk sac, migrate through the bloodstream and seed the fetal liver to rapidly initiate the first phase of intraembryonic hematopoiesis. Together, these findings demonstrate that commitment to hematopoietic fates begins in early gastrulation, that the yolk sac is the only site of primitive erythropoiesis and that the yolk sac serves as the first source of definitive hematopoietic progenitors during embryonic development.