Accumulating evidence in various species has suggested that the origin of definitive hematopoiesis is associated with a special subset of endothelial cells (ECs) that maintain the potential to give rise to hematopoietic cells (HPCs). In this study, we demonstrated that a combination of 5′-flanking region and 3′ portion of the first intron of the Flk-1 gene (Flk-1 p/e) that has been implicated in endothelium-specific gene expression distinguishes prospectively the EC that has lost hemogenic activity. We assessed the activity of this Flk-1 p/e by embryonic stem (ES) cell differentiation culture and transgenic mice by using the GFP gene conjugated to this unit. The expression of GFP differed from that of the endogenous Flk-1 gene in that it is active in undifferentiated ES cells and inactive in Flk-1+ lateral mesoderm. Flk-1 p/e becomes active after generation of vascular endothelial (VE)-cadherin+ ECs. Emergence of GFP- ECs preceded that of GFP+ ECs, and, finally, most ECs expressed GFP both in vitro and in vivo. Cell sorting experiments demonstrated that only GFP- ECs could give rise to HPCs and preferentially expressed Runx1 and c-Myb genes that are required for the definitive hematopoiesis. Integration of both GFP+ and GFP- ECs was observed in the dorsal aorta, but cell clusters appeared associated only to GFP- ECs. These results indicate that activation of Flk-1 p/e is associated with a process that excludes HPC potential from the EC differentiation pathway and will be useful for investigating molecular mechanisms underlying the divergence of endothelial and hematopoietic lineages.