The differentiation of embryonic stem (ES) cells offers a powerful approach to study mechanisms implicated in cell fate decision. A major hurdle, however, is to promote the directed and efficient differentiation of ES cells toward a specific lineage. Here, we define in serum-free media the minimal factor requirement controlling each step of the differentiation process, resulting in the production of highly enriched hematopoietic progenitors. Four factors - Bmp4, activin A, bFGF (Fgf2) and VEGF (VegfA) - are sufficient to drive the selective and efficient differentiation of mouse ES cells to hematopoiesis. Each of these factors appears to regulate a step of the process: Bmp4 promotes the very efficient formation of mesoderm; bFGF and activin A induce the differentiation of these mesodermal precursors to the hemangioblast fate; and VEGF is required for the production of fully committed hematopoietic progenitors. The stimulation of mesodermal precursors by bFGF and activin A switches on very rapidly the hematopoietic program, allowing us to dissect the molecular events leading to the formation of the hemangioblast. Runx1, Scl (Tal1) and Hhex expression is upregulated within 3 hours of stimulation, whereas upregulation of Lmo2 and Fli1 is observed later. Interestingly, increased expression levels of genes such as cMyb, Pu.1 (Sfpi1), Gata1 and Gata2 are not observed at the onset of hemangioblast commitment. This stepwise control of differentiation is extremely efficient, giving rise to a very high frequency of hematopoietic precursors, and provides an optimal system for understanding the molecular machineries involved in blood progenitor commitment.