The hox genes play a central role in organogenesis and are implicated in the formation of hematopoietic stem cells (HSCs). The cdx genes encode homeodomain transcription factors that act as master regulators of the hox genes. In zebrafish, mutations in cdx4 cause a severe, but not complete, deficit in embryonic blood cells. Here, we report the expression and function of cdx1a, a zebrafish Cdx1 paralogue. Using morpholino-mediated knockdown of cdx1a in a cdx4 mutant background, we show that a deficiency in both cdx genes causes a severe perturbation of hox gene expression and a complete failure to specify blood. The hematopoietic defect in cdx-deficient embryos does not result from a general block in posterior mesoderm differentiation as endothelial cells and kidney progenitors are still formed in the doubly deficient embryos. In addition, cdx-deficient embryos display a significant reduction in runx1a(+) putative HSCs in the zebrafish equivalent to the aorta-gonad-mesonephros (AGM) region. Overexpressing hoxa9a in cdx-deficient embryos rescues embryonic erythropoiesis in the posterior mesoderm as well as the formation of HSCs in the AGM region. Taken together, these results suggest that the cdx-hox pathway plays an essential role in the formation of both embryonic erythroid cells and definitive HSCs during vertebrate embryogenesis.