Haematopoietic and vascular cells are thought to arise from a common progenitor called the haemangioblast. Support for this concept has been provided by embryonic stem (ES) cell differentiation studies that identified the blast colony-forming cell (BL-CFC), a progenitor with both haematopoietic and vascular potential. Using conditions that support the growth of BL-CFCs, we identify comparable progenitors that can form blast cell colonies (displaying haematopoietic and vascular potential) in gastrulating mouse embryos. Cell mixing and limiting dilution analyses provide evidence that these colonies are clonal, indicating that they develop from a progenitor with haemangioblast potential. Embryo-derived haemangioblasts are first detected at the mid-streak stage of gastrulation and peak in number during the neural plate stage. Analysis of embryos carrying complementary DNA of the green fluorescent protein targeted to the brachyury locus demonstrates that the haemangioblast is a subpopulation of mesoderm that co-expresses brachyury (also known as T) and Flk-1 (also known as Kdr). Detailed mapping studies reveal that haemangioblasts are found at highest frequency in the posterior region of the primitive streak, indicating that initial stages of haematopoietic and vascular commitment occur before blood island development in the yolk sac.