The physiological role of SDF-1 on hematopoietic stem cells (HSCs) remains elusive. We show that colonization of bone marrow by HSCs in addition to myeloid cells is severely impaired in SDF-1-/- embryos by a long-term repopulation assay. Colonization of spleen by HSCs was also affected, but to a lesser extent. Enforced expression of SDF-1 under the control of vascular-specific Tie-2 regulatory sequences could completely rescue the reduction of HSCs but not myeloid cells in SDF-1-/- bone marrow. SDF-1 was detected in the vicinity of the vascular endothelial cells in fetal bone marrow. SDF-1 plays a critical role in colonization of bone marrow by HSCs and myeloid cells during ontogeny, and the mechanisms by which SDF-1 functions are distinct between HSCs and myeloid cells.