The adult hematopoietic system of mammals is a dynamic hierarchy of cells with the hematopoietic stem cell at its foundation. During embryonic development, the source and expansion potential of this cell remain unclear. Two sites of hematopoietic activity, the yolk sac and aorta-gonad-mesonephros (AGM) region, function in mouse ontogeny at the pre-liver stage of hematopoiesis. However, cellular interchange between these tissues obscures the embryonic site of hematopoietic stem cell generation. Here we present the results of a novel in vitro organ culture system demonstrating that, at day 10 in gestation, hematopoietic stem cells initiate autonomously and exclusively within the AGM region. Furthermore, we provide evidence for the in vitro expansion of hematopoietic stem cells within the AGM region. These results strongly suggest that the AGM region is the source of the definitive adult hematopoietic system, which subsequently colonizes the liver.