Definitive hematopoietic progenitor cells have been thought to develop from the vascular endothelium located in the aorta-gonad-mesonephros region of the mouse embryo. However, several recent findings have suggested that most hematopoietic progenitors are derived from non-endothelial precursor cells expressing CD41. We characterized two distinct precursor populations of definitive hematopoietic cell lineages, vascular endothelial (VE)-cadherin(+) CD41(-) CD45(-) endothelial cells and CD41(+) CD45(-) non-endothelial progenitors, both of which are derived from lateral mesoderm. VE-cadherin(+) endothelial cells obtained from cultures of differentiating embryonic stem cells possessed hematopoietic potential encompassing erythroid, myeloid and B lymphoid lineages, whereas CD41(+) progenitors lacked the B lymphopoietic potential. VE-cadherin(+) endothelial cells in the lower trunk of the embryo proper showed a significant potential for initiating B lymphopoiesis in cultures, while endothelial cells in the yolk sac appeared to have a bias for myeloerythropoietic differentiation. CD41(+) progenitors isolated from yolk sac and embryo proper were capable of generating multiple hematopoietic lineages, although mast cell precursors were exclusively enriched in CD41(+) progenitors in the yolk sac. These results suggest that hemogenic endothelial cells and CD41(+) progenitors possess distinct hematopoietic potential depending on the tissues in which they reside.