Increasing evidence points to endoglin (Eng), an accessory receptor for the transforming growth factor-β superfamily commonly associated with the endothelial lineage, as an important regulator of the hematopoietic lineage. We have shown that lack of Eng results in reduced numbers of primitive erythroid colonies as well as downregulation of key hematopoietic genes. To determine the effect of Eng overexpression in hematopoietic development, we generated a doxycycline-inducible embryonic stem cell line. Our results demonstrate that induction of Eng during embryoid body differentiation leads to a significant increase in the frequency of hematopoietic progenitors, in particular, the erythroid lineage, which correlated with upregulation of Scl, Gata1, Runx1, and embryonic globin. Interestingly, activation of the hematopoietic program happened at the expense of endothelial and cardiac cells, as differentiation into these mesoderm lineages was compromised. Eng-induced enhanced erythroid activity was accompanied by high levels of Smad1 phosphorylation. This effect was attenuated by addition of a bone morphogenetic protein (BMP) signaling inhibitor to these cultures. Among the BMPs, BMP4 is well known for its role in hematopoietic specification from mesoderm by promoting expression of several hematopoietic genes, including Scl. Because Scl is considered the master regulator of the hematopoietic program, we investigated whether Scl would be capable of rescuing the defective hematopoietic phenotype observed in Eng-/- embryonic stem cells. Scl expression in Eng-deficient embryonic stem cells resulted in increased erythroid colony-forming activity and upregulation of Gata1 and Gata2, positioning Eng upstream of Scl. Taken together, these findings support the premise that Eng modulates the hematopoietic transcriptional network, most likely through regulation of BMP4 signaling.