The yolk sac, first site of hematopoiesis during mammalian development, contains not only hematopoietic stem cells but also the earliest precursors of endothelial cells. We have previously shown that a nonadherent yolk sac cell population (WGA+, density < 1.077, AA4.1+) can give rise to B cells, T cells and myeloid cells both in vitro and in vivo. We now report on the ability of a yolk sac-derived cloned endothelial cell line (C166) to provide a suitable microenvironment for expansion of these early precursor cells. Single day 10 embryonic mouse yolk sac hematopoietic stem cells wer expanded > 100 fold within 8 days by coculture with irradiated C166 cells. Colony-forming ability was retained for at least three passages in vitro, with retention of the ability to differentiate into T-cell, B-cell, and myeloid lineages. Stem cell properties were maintained by a significant fraction of nonadherent cells in the third passage, although these stem cells expressed a somewhat more mature cell surface phenotype than the initial yolk sac stem cells. When reintroduced into adult allogeneic immunocompromised (scid) hosts, they were able to give rise to all of the leukocyte lineages, including T cells, B cells, and myeloid cells. We conclude that yolk sac endothelial cells can support the stable proliferation of multipotential hematopoietic stem cells, thus generating adequate numbers of cells for study of the mechanisms involved in their subsequent development and differentiation, for in vivo hematopoietic restitution, and for potential use as a vehicle for gene transfer.