hES cells provide an unique opportunity to study the earliest stages of hematopoietic commitment which are not easily accessible in the human embryo. To model early hematopoietic development, we cultured H1 and H9 hES cell lines on OP9 stromal cells without the addition of cytokines. On day 2 of co-culture, hES cells up-regulated brachyury expression and began to form mesodermal-like colonies. A transient population of blast colony-forming cells (CFCs) with the potential to differentiate into blood and endothelial cells was detected on days 3–6 of co-culture. CD34+ cells first appeared on day 3–4 of co-culture, which was coincident with induction of the transcription factors GATA-1, GATA-2 and SCL. CD43+ and CD41a+ cells along with CFCs emerged 2 days later within CD34+ population; 3–4 days before the appearance of CD45+ cells. We were able to obtain up to 20% of CD34+ cells from hES/OP9 co-culture and isolate up to 107 CD34+ cells with more than 95% purity from a similar number of initially plated hES cells after 8–9 days of culture. The hES cell-derived CD34+ cells were highly enriched in CFCs, displayed CD90+CD117+CD164+CD38- phenotype of primitive hematopoietic progenitors, and contained ALDHhigh cells as well cells with verapamil-sensitive ability to efflux rhodamine 123. Isolated CD34+ cells differentiated into lymphoid (NK cells) as well as myeloid (neutrophils and macrophages) lineages when cultured on MS-5 stromal cells in the presence of SCF, Flt3-L, IL7 and IL3. These data indicate that hES cell/OP9 co-culture reproduces the major events that are observed during embryonal hematopoietic development, including the formation of lympho-myeloid progenitors. We employed OP9 system for identification of the phenotype of early hematopoietic progenitors in humans and to directly differentiate hES cells into different blood lineages.