Human embryonic stem cells (hESCs) provide a unique opportunity to study molecular mechanisms that regulate specification of the hematopoietic lineage in the human. Exploitation of this model using transgenic strategies depends on the ability to target cells of the hematopoietic lineage effectively and establish stable transgene expression. Here, a recently defined subpopulation of endothelial-like precursors derived from hESCs that is exclusively responsible for hematopoietic cell fate (CD45(neg)PFV) is shown to express GALVR-1 receptor and be efficiently transduced with GALV-pseudotyped retrovirus. Retroviral transduction, measured by enhanced green fluorescent protein, of hESC-derived CD45(+) cells differentiated from isolated CD45(neg)PFV precursors was 26.5 +/- 13% with 5.6 +/- 4% of these cells coexpressing CD34. An average of 17.5% of clonogenic hematopoietic progenitors derived from CD45(neg)PFV precursors expressed the retroviral transgene. Addition of serum to cultures after retroviral exposure supported transgene expression in resulting hematopoietic cells derived from hemogenic CD45(neg)PFV precursors. Our study represents the first report to demonstrate that retroviral transduction systems, similar to those used currently in clinical gene therapy protocols, are capable of efficient transduction of hematopoietic progenitors derived from hESCs.