Combinations of hematopoietic cytokines and the ventral mesoderm inducer BMP-4 have recently been shown to augment hematopoietic cell fate of human embryonic stem cells (hESCs) during embryoid body (EB) development. However, factors capable of regulating lineage commitment of hESC-derived hematopoiesis have yet to be reported. Here we show that vascular endothelial growth factor (VEGF-A165) selectively promotes erythropoietic development from hESCs. Effects of VEGF-A165 were dependent on the presence of hematopoietic cytokines and BMP-4, and could be augmented by addition of erythropoietin (EPO). Treatment of human EBs with VEGF-A165 increased the frequency of cells coexpressing CD34 and the VEGF-A165 receptor KDR, as well as cells expressing erythroid markers. Although fetal/adult globins were unaffected, VEGF-A165 induced the expression of embryonic zeta (ζ) and epsilon (ϵ) globins, and was accompanied by expression of the hematopoietic transcription factor SCL/Tal-1. In addition to promoting erythropoietic differentiation from hESCs, the presence of VEGF-A165 enhanced the in vitro self-renewal potential of primitive hematopoietic cells capable of erythroid progenitor capacity. Our study demonstrates a role for VEGF-A165 during erythropoiesis of differentiating hESCs, thereby providing the first evidence for a factor capable of regulating hematopoietic lineage development of hESCs.