For a host of diseases, cell-based therapies offer great promise to restore health. The recent isolation of human ES cells makes regenerative cell therapy a theoretical possibility but leaves enormous practical challenges. The Hematopoietic Stem Cell (HSC) is a frequently exploited cell therapy and a prime target for gene therapy. Generating HSCs from human ES cells would enable basic investigation into genetic and epigenetic influences on blood cell fate and empower pre-clinical models for gene and cell therapy. Blood formation from murine ES cells in vitro resembles the yolk sac stage of embryonic development, and previous data have shown that yolk sac progenitors fail to engraft directly in adults. Thus, a major challenge is whether differentiated blood derivatives of ES cells can be isolated that engraft effectively when transplanted into the adult. In our preliminary studies using mouse ES cells, we have identified an embryonic HSC and genetically modified it to enable lymphoid-myeloid engraftment in adult mice. We propose to extend our studies of mouse ES cells to the therapeutically relevant human ES cell lines. Using the WAO9 (H9) cell line, which we have obtained from Dr. Joseph ltskovitz, co-author on the original report of human ES cell isolation, we will determine the nature of blood progenitor development during in vitro differentiation of hES cells and probe the cytokine and stromal culture requirements for optimal production. We will determine whether the earliest hematopoietic progenitor to develop from hES cells is the hemangioblast, a common precursor of the hematopoietic and endothelial lineages, and whether hematopoiesis transitions from the primitive to the definitive hematopoietic program in vitro, thus facilitating engraftment in the adult. We will search for a human equivalent of the embryonic-HSC capable of generating both primitive nucleated erythrocytes and contributing to the definitive lymphoid-myeloid-erythroid lineages. And we will use a novel system for expression cloning to identify cDNAs for factors that mediate self-renewal and differentiation in hES cells. Our goal is to carefully define hematopoietic development from human ES cells, and to establish a pre-clinical platform for the hES- based cell therapies of the future.