Blood cells comprise very diverse cell types with a wide range of crucial functions; however, they share a common progenitor cell type—the hematopoietic stem cell (HSC). Clarifying how HSCs differentiate into these diverse cell types is important for understanding how they attain their various functions and offers the potential for therapeutic manipulation. Various theories exist about how HSCs diversify; in particular, one model (the ‘classical’ model) proposes that lymphocytes and myelo-erythroid lineages branch separately at an early stage of hematopoiesis, whereas another model (the ‘myeloid-based’ model) proposes that the myeloid potential is retained for much longer among cells that can become lymphocytes. This article describes and compares these models and outlines recent evidence supporting the myeloid-based model.