Definitive hematopoietic stem cells (HSCs) first appear in the aorta/gonad/mesonephros (AGM) region and migrate to the fetal liver where they massively produce hematopoietic cells before establishing hematopoiesis in the bone marrow at a perinatal stage. In the AGM region, Oncostatin M (OSM) enhances the development of both hematopoietic and endothelial cells by possibly stimulating their common precursors, so-called hemangioblasts. During development of HSCs in the AGM region, the liver primodium is formed at the foregut and accepts HSCs. While fetal hepatic cells function as hematopoietic microenvironment for expansion of hematopoietic cells during mid to late gestation, they do not possess most of the metabolic functions of adult liver. Along with the expansion of hematopoietic cells in fetal liver, OSM is produced by hematopoietic cells and induces differentiation of fetal hepatic cells, conferring various metabolic activities of adult liver. Matured hepatic cells then lose the ability to support hematopoiesis. Thus, OSM appears to coordinate the development of liver and hematopoiesis in the fetus.