The development of the hematopoietic system during early embryonic stages occurs in spatially and temporally distinct waves. Hematopoietic stem cells (HSC), the most potent and self-renewing cells of this system, are produced in the final 'definitive' wave of hematopoietic cell generation. In contrast to HSCs in the adult, which differentiate via intermediate progenitor populations to produce functional blood cells, the generation of hematopoietic cells in the embryo prior to HSC generation occurs in the early waves by producing blood cells without intermediate progenitors (such as the 'primitive' hematopoietic cells). The lineage relationship between the early hematopoietic cells and the cells giving rise to HSCs, the genetic networks controlling their emergence, and the precise temporal determination of HSC fate remain topics of intense research and debate. This Review article discusses the current knowledge on the step-wise embryonic establishment of the adult hematopoietic system, examines the roles of pivotal intrinsic regulators in this process, and raises questions concerning the temporal onset of HSC fate determination.