The most common human cell-based therapy applied today is hematopoietic stem cell (HSC) transplantation. HSCs can be defined by two essential properties: self-renewal and multilineage hematopoietic differentiation. These combined HSC properties allow them to differentiate into all blood cell types (multilineage) in a sustained manner for the lifetime of the animal, which requires their ability to make cellular copies of themselves (self-renewal). These features can be tested by transplantation from donor to recipient and provide a functional basis to define and identify HSCs. Currently, human bone marrow (BM), mobilized peripheral blood, and umbilical cord blood (CB) represent the major sources of transplantable HSCs, but their availability for use is limited by both quantity and compatibility. Although increasing evidence suggests that somatic HSCs can be expanded to meet current needs, their in vivo potential is concomitantly compromised after ex vivo culture. Pluripotent human embryonic stem cells (hESCs) may provide an alternative. hESCs possess indefinite proliferative capacity in vitro, and have been shown to differentiate into the hematopoietic cell fate, giving rise to erythroid, myeloid, and lymphoid lineages using a variety of differentiation procedures. In most cases, hESC-derived hematopoietic cells show similar clonogenic progenitor capacity and primitive phenotype to somatic sources of hematopoietic progenitors, but possess limited in vivo repopulating capacity when transplanted into immunodeficient mice. Although this suggests HSC function can be derived from hESCs, the efficiency and quality of these cells must be characterized using surrogate models for potential clinical applications.