Notch signaling is essential for definitive hematopoiesis, but its role in human embryonic hematopoiesis is largely unknown. We show that in hESCs the expression of the Notch ligand DLL4 is induced during hematopoietic differentiation. We found that DLL4 is only expressed in a sub-population of bipotent hematoendothelial progenitors (HEPs) and segregates their hematopoietic versus endothelial potential. We demonstrate at the clonal level and through transcriptome analyses that DLL4 high HEPs are enriched in endothelial potential, whereas DLL4 low/–HEPs are committed to the hematopoietic lineage, albeit both populations still contain bipotent cells. Moreover, DLL4 stimulation enhances hematopoietic differentiation of HEPs and increases the amount of clonogenic hematopoietic progenitors. Confocal microscopy analysis of whole differentiating embryoid bodies revealed that DLL4 high HEPs are located close to DLL4 low/–HEPs, and at the base of clusters of CD45+ cells, resembling intra-aortic hematopoietic clusters found in mouse embryos. We propose a model for human embryonic hematopoiesis in which DLL4 low/–cells within hemogenic endothelium receive Notch-activating signals from DLL4 high cells, resulting in an endothelial-to-hematopoietic transition and their differentiation into CD45+ hematopoietic cells.