Human embryonic stem cells (hESCs) are a potential source of hematopoietic cells for therapeutic transplantation and can provide a model for human hematopoiesis. Culture of hESCs on murine stromal layers or in stromal-free conditions as embryoid bodies results in low levels of hematopoietic cells. Here we demonstrate that overexpression of the transcription factor HOXB4 considerably augments hematopoietic development of hESCs. Stable HOXB4-expressing hESC clones were generated by lipofection and could be maintained in the undifferentiated state for prolonged passages. Moreover, differentiation of hESCs as embryoid bodies in serum-containing medium without the use of additional cytokines led to sequential expansion of first erythroid and then myeloid and monocytic progenitors from day 10 of culture. These cells retained the capacity to develop into formed blood elements during in vitro culture. Consistent with the development of committed hematopoietic cells, we observed the expression of transcription factors known to be critical for hematopoietic development. We thus demonstrate successful use of enforced gene expression to promote the differentiation of hESCs into a terminally differentiated tissue, thereby revealing an important role for HOXB4 in supporting their in vitro development along the hematopoietic pathway.