Efficient production of haematopoietic stem (HPS) cells from embryonic stem (ES) cells or from induced pluripotent stem (iPS) cells requires a thorough understanding of haematopoietic differentiation pathways. On p. 2829, Gordon Keller and colleagues show that generation of HPS cells from ES and iPS cells follows the same steps as haematopoietic development in the embryo. They induced ES cells with known agonists of embryonic haematopoiesis (activin A, BMP4 and VEGF) and identified two temporally distinct populations of cells expressing the haematopoietic marker Flk1. The gene expression profiles, cell surface markers and lymphoid potential of the early Flk1-positive population resemble those of the first site of embryonic haematopoiesis, whereas the cells that express Flk1 at a later stage correspond to a later stage of haematopoiesis. The ability to identify and isolate different stages in the progression from ES or iPS cells to HPS cells will facilitate the study of the generation of blood cell lineages and might improve the efficiency of production of transplantable cells.