Though a topic of medical interest for centuries, our understanding of vertebrate hematopoietic or "blood-forming" tissue development has improved greatly only in recent years and given a series of scientific and technical milestones. Key among these observations was the description of procedures that allowed the transplantation of blood-forming activity. Beyond this, other advances include the creation of a variety of knock-out animals (mice and more recently zebrafish), microdissection of embryonic and fetal blood-forming tissues, hematopoietic stem (HSC) and progenitor cell (HPC) colony-forming assays, the discovery of cytokines with defined hematopoietic activities, gene transfer technologies, and the description of lineage-specific surface antigens for the identification and purification of pluripotent and differentiated blood cells. The availability of both murine and human embryonic stem cells (ESC) and the delineation of in vitro systems to direct their differentiation have now been added to this analytical arsenal. Such tools have allowed researchers to interrogate the complex developmental processes behind both primitive (yolk sac or extraembryonic) and definitive (intraembryonic) hematopoietic tissue formation. Using ES cells, we hope to not only gain additional basic insights into hematopoietic development but also to develop platforms for therapeutic use in patients suffering from hematological disease. In this review, we will focus on points of convergence and divergence between murine and human hematopoiesis in vivo and in vitro, and use these observations to evaluate the literature regarding attempts to create hematopoietic tissue from embryonic stem cells, the pitfalls encountered therein, and what challenges remain.