There is great excitement in generating different types of somatic cells from in vitro differentiated embryonic stem (ES) cells, because they can potentially be utilized for therapies for human diseases for which there are currently no effective treatments. Successful generation and application of ES-derived somatic cells requires better understanding of molecular mechanisms that regulate self-renewal and lineage commitment. Accordingly, many studies are aimed toward understanding mechanisms for maintaining the stem cell state and pathways leading to lineage specification. In this chapter we discuss recent studies that examine molecules that are critical for ES cell self-renewal, as well as hematopoietic and endothelial cell lineage differentiation from ES cells.