The ontogeny of the hematopoietic system in mammalian embryos occurs during the yolk sac (YS) and the fetal liver (FL) stages. Events leading to the establishment of hematopoiesis in the FL remain obscure. The appearance of colony-forming units-spleen (CFU-S) in the FL is preceded by a gradual increase of CFU-S in the YS and a more rapid increase in the AGM region (area comprising dorsal aorta, gonads, and mesonephros) during day 10 of development (Medvinsky et al, Nature 364:64, 1993). By this time, the AGM CFU-S attain a high frequency equivalent to that found in the adult bone marrow. The analogous area gives rise to adult hematopoiesis in amphibians and probably in birds. We present here a more complete picture of CFU-S development during transition from the pre-liver to liver stage of hematopoiesis. (1) Dissectional analysis of the mouse AGM region shows the presence of CFU- S both around the dorsal aorta and in the uro-genital ridges. (2) The embryonic gut also shows low but distinctive CFU-S activity. This initial intrabody pattern of CFU-S distribution in murine embryogenesis parallels that found for primordial germ cells. (3) The beginning of definitive liver hematopoiesis is accompanied by wide dissemination of CFU-S in the embryonic tissues. (4) Comparison of spleen colonies arising from the AGM and YS has shown morphologic differences. In contrast to simple erythroid constitution of the YS colonies, a broader variety of cells are found within the AGM-derived colonies that are similar to those derived from 11-day FL. These data suggest a lineage relationship for hematopoietic progenitors between the AGM region and the FL.