The transcription factor SCL is critically required for establishing hematopoiesis and for proper endothelial development, but not for maintenance of hematopoietic stem cells or endothelial cells in the adult. Conflicting data exists regarding the developmental function of SCL, namely, whether it acts as a master regulator, actively patterning mesoderm toward hematopoietic development at the expense of other lineages, or is merely necessary to maintain the earliest committed hematopoietic precursors. To answer this question, we have engineered murine embryonic stem cells with a conditional doxycycline-inducible SCL transgene, and evaluated the effects of SCL expression at defined time points during in vitro development. Continual SCL expression during differentiation results in markedly increased hematopoiesis. By using pulses of gene expression over a 6-day differentiation time course, we map and characterize windows of SCL responsiveness. Notably, a pulse of SCL expression during early mesodermal patterning (48 to 72 hours of differentiation) promoted Flk1+ PDGFRalphaneg presumptive extraembryonic/lateral plate mesoderm at the expense of PDGFRalpha+ Flk1neg presumptive paraxial mesoderm. Consistent with this, the early pulse of SCL expression also expanded hematopoietic colony-forming cell numbers, while concomitantly repressing expression of paraxial and cardiac markers, and inhibited development of beating cardiomyocytes. By mixing the inducible embryonic stem cells with fluorescently labeled wild-type cells in chimeric embryoid bodies, we show that these effects of SCL are cell autonomous. These data support a master-regulatory role for SCL in mesodermal patterning, in addition to its established later roles in hematopoietic differentiation.