The onset of hematopoiesis in mammals is defined by generation of primitive erythrocytes and macrophage progenitors in embryonic yolk sac. Laboratories have met the challenge of transient and swiftly changing specification events from ventral mesoderm through multipotent progenitors and maturing lineage-restricted hematopoietic subtypes, by developing powerful in vitro experimental models to interrogate hematopoietic ontogeny. Most importantly, studies of differentiating embryonic stem cell derivatives in embryoid body and stromal coculture systems have identified crucial roles for transcription factor networks (e.g. Gata1, Runx1, Scl) and signaling pathways (e.g. BMP, VEGF, WNT) in controlling stem and progenitor cell output. These and other relevant pathways have pleiotropic biological effects, and are often associated with early embryonic lethality in knockout mice. Further refinement in subsequent studies has allowed conditional expression of key regulatory genes, and isolation of progenitors via cell surface markers (e.g. FLK1) and reporter-tagged constructs, with the purpose of measuring their primitive and definitive hematopoietic potential. These observations continue to inform attempts to direct the differentiation, and augment the expansion, of progenitors in human cell culture systems that may prove useful in cell replacement therapies for hematopoietic deficiencies. The purpose of this review is to survey the extant literature on the use of differentiating murine embryonic stem cells in culture to model the developmental process of yolk sac hematopoiesis.