The human/sheep xenograft model has proven valuable in assessing the in vivo hematopoietic activity of stem cells from a variety of fetal and postnatal human sources. CD34+/lineage- or CD34+/ CD38- cells isolated from human embryonic stem cells (hESCs) differentiated on S17 feeder layer were transplanted by intraperitoneal injections into fetal sheep. Chimerism in primary transplants was established with polymerase chain reaction (PCR) and flow cytometry of bone marrow and peripheral blood samples. Whole bone marrow cells harvested from a primary recipient were transplanted into a secondary recipient. Chimerism was established as described before. This animal was stimulated with human GM-CSF, and an increase in human hematopoietic activity was noted by flow cytometry. Bone marrow aspirations cultured in methylcellulose generated colonies identified by PCR to be of human origin. We therefore conclude that hESCs are capable of generating hematopoietic cells that engraft primary recipients. These cells also fulfill the criteria for long-term engrafting hematopoietic stem cells as demonstrated by engraftment and differentiation in the secondary recipient.