Transfusion of donor-derived platelets is commonly used for thrombocytopenia, which results from a variety of clinical conditions and relies on a constant donor supply due to the limited shelf life of these cells. Embryonic stem (ES) and induced pluripotent stem (iPS) cells represent a potential source of megakaryocytes and platelets for transfusion therapies; however, the majority of current ES/iPS cell differentiation protocols are limited by low yields of hematopoietic progeny. In both mice and humans, mutations in the gene-encoding transcription factor GATA1 cause an accumulation of proliferating, developmentally arrested megakaryocytes, suggesting that GATA1 suppression in ES and iPS cell-derived hematopoietic progenitors may enhance megakaryocyte production. Here, we engineered ES cells from WT mice to express a doxycycline-regulated (dox-regulated) shRNA that targets Gata1 transcripts for degradation. Differentiation of these cells in the presence of dox and thrombopoietin (TPO) resulted in an exponential (at least 1013-fold) expansion of immature hematopoietic progenitors. Dox withdrawal in combination with multilineage cytokines restored GATA1 expression, resulting in differentiation into erythroblasts and megakaryocytes. Following transfusion into recipient animals, these dox-deprived mature megakaryocytes generated functional platelets. Our findings provide a readily reproducible strategy to exponentially expand ES cell-derived megakaryocyte-erythroid progenitors that have the capacity to differentiate into functional platelet-producing megakaryocytes.