Krüppel-like factor 6 (KLF6) is a member of a growing family of transcription factors that share a common 3 C2H2 zinc finger DNA binding domain and have broad activity in regulating proliferation and development. We have previously established that Klf6 is expressed in neuronal tissue, hindgut, heart, lung, kidney, and limb buds during midgestation. To explore the potential role of Klf6 in mouse development, we analyzed Klf6-/- mice and found that the homozygous mutation is embryonic lethal by embryonic day (E) 12.5 and associated with markedly reduced hematopoiesis and poorly organized yolk sac vascularization. Additionally, mRNA levels of Scl and Gata1 were reduced by approximately 80% in Klf6-/- yolk sacs. To further analyze this phenotype, we generated Klf6-/- embryonic stem (ES) cells by homologous recombination, and compared their capacity to differentiate into the hematopoietic lineage with that of either Klf6+/- or Klf6+/+ ES cells. Consistent with the phenotype in the early embryo, Klf6-/- ES cells displayed significant hematopoietic defects following differentiation into EBs. Prolongation of epiblast-like cells and delays in mesoderm induction were also observed in the Klf6-/- EBs, associated with delayed expression of Brachyury, Klf1, and Gata1. Forced expression of KLF6 using a tet-inducible system enhanced the hematopoietic potential of wild-type EBs. Collectively, these findings implicate Klf6 in ES-cell differentiation and hematopoiesis.