During embryonic development, the establishment of the primitive erythroid lineage in the yolk sac is a temporally and spatially restricted program that defines the onset of hematopoiesis. In this report, we have used the embryonic stem cell differentiation system to investigate the regulation of primitive erythroid development at the level of the hemangioblast. We show that the combination of Wnt signaling with inhibition of the Notch pathway is required for the development of this lineage. Inhibition of Notch signaling at this stage appears to be mediated by the transient expression of Numb in the hemangioblast-derived blast cell colonies. Activation of the Notch pathway was found to inhibit primitive erythropoiesis efficiently through the upregulation of inhibitors of the Wnt pathway. Together, these findings demonstrate that specification of the primitive erythroid lineage is controlled, in part, by the coordinated interaction of the Wnt and Notch pathways, and position Numb as a key mediator of this process.