One of the principal issues facing biomedical research is to elucidate developmental pathways and to establish the fate of stem and progenitor cells in vivo. Hematopoiesis, the process of blood cell formation, provides a powerful experimental system for investigating this process. Here, we employ transcriptional regulatory elements from the stem cell leukemia (SCL) gene to selectively label primitive and definitive hematopoiesis. We report that SCL-labelled cells arising in the mid to late streak embryo give rise to primitive red blood cells but fail to contribute to the vascular system of the developing embryo. Restricting SCL-marking to different stages of foetal development, we identify a second population of multilineage progenitors, proficient in contributing to adult erythroid, myeloid and lymphoid cells. The distinct lineage-restricted potential of SCL-labelled early progenitors demonstrates that primitive erythroid cell fate specification is initiated during mid gastrulation. Our data also suggest that the transition from a hemangioblastic precursors with endothelial and blood forming potential to a committed hematopoietic progenitor must have occurred prior to SCL-marking of definitive multilineage blood precursors.