The blast colony-forming cell (BL-CFC) was identified as an equivalent to the hemangioblast during in vitro embryonic stem (ES) cell differentiation. However, the molecular mechanisms underlying the generation of the BL-CFC remain largely unknown. Here we report the isolation of mouse lysocardiolipin acyltransferase (Lycat) based on homology to zebrafish lycat, a candidate gene for the cloche locus. Mouse Lycat is expressed in hematopoietic organs and is enriched in the Lin(-)C-Kit(+)Sca-1(+) hematopoietic stem cells in bone marrow and in the Flk1(+)/hCD4(+)(Scl(+)) hemangioblast population in embryoid bodies. The forced Lycat transgene leads to increased messenger RNA expression of hematopoietic and endothelial genes as well as increased blast colonies and their progenies, endothelial and hematopoietic lineages. The Lycat small interfering RNA transgene leads to a decrease expression of hematopoietic and endothelial genes. An unbiased genomewide microarray analysis further substantiates that the forced Lycat transgene specifically up-regulates a set of genes related to hemangioblasts and hematopoietic and endothelial lineages. Therefore, mouse Lycat plays an important role in the early specification of hematopoietic and endothelial cells, probably acting at the level of the hemangioblast.