Deletion of caudal/cdx genes alters hox gene expression and causes defects in posterior tissues and hematopoiesis. Yet, the defects in hox gene expression only partially explain these phenotypes. To gain deeper insight into Cdx4 function, we performed chromatin immunoprecipitation sequencing (ChIP-seq) combined with gene-expression profiling in zebrafish, and identified the transcription factor spalt-like 4 (sall4) as a Cdx4 target. ChIP-seq revealed that Sall4 bound to its own gene locus and the cdx4 locus. Expression profiling showed that Cdx4 and Sall4 coregulate genes that initiate hematopoiesis, such as hox, scl, and lmo2. Combined cdx4/sall4 gene knockdown impaired erythropoiesis, and overexpression of the Cdx4 and Sall4 target genes scl and lmo2 together rescued the erythroid program. These findings suggest that auto- and cross-regulation of Cdx4 and Sall4 establish a stable molecular circuit in the mesoderm that facilitates the activation of the blood-specific program as development proceeds.