In the mammal, definitive hematopoietic stem cells (HSCs) are first derived from mesodermal cells within a region of the embryonic para-aortic splanchnopleura known as the aorta-gonad-mesonephros (AGM). Within this region, HSCs are thought to arise from hemangioblast precursors located in the ventral wall of the dorsal aorta. However, the factors that regulate HSC development in vivo are still largely unknown. Bone morphogenetic protein (BMP)-4, a member of the transforming growth factor beta (TGF-beta) superfamily of growth factors, is a potent ventralizing factor and has been implicated in the commitment of embryonic mesodermal cells to a hematopoietic fate in a number of systems. In the human AGM, we find that BMP-4 is expressed at high levels, and with striking polarity, in a region of densely packed cells underlying intra-aortic hematopoietic clusters. In contrast, TGF-beta1 is expressed predominantly by hematopoietic cells within the clusters. These findings implicate both BMP-4 and TGF-beta1 in the initiation and regulation of hematopoiesis in the human AGM. Furthermore, the distribution of BMP-4 expression is highly suggestive of a direct role in the specification of human hematopoietic cells from embryonic mesoderm in vivo. (Blood. 2000;96:1591-1593)