Chromosomal translocations associated with malignancies often result in deregulated expression of genes encoding transcription factors. In human T-cell leukaemias such regulators belong to diverse protein families and may normally be expressed widely (for example, Ttg-1/rbtn1, Ttg-2/rbtn2), exclusively outside the haematopoietic system (for example, Hox11), or specifically in haematopoietic cells and other selected sites (for example, tal-1/SCL, lyl-1). Aberrant expression within T cells is though to interfere with programmes of normal maturation. The most frequently activated gene in acute T-cell leukaemias, tal-1 (also called SCL), encodes a candidate regulator of haematopoietic development, a basic-helix-loop-helix protein, related to critical myogenic and neurogenic factors. Here we show by targeted gene disruption in mice that tal-1 is essential for embryonic blood formation in vivo. With respect to embryonic erythropoiesis, tal-1 deficiency resembles loss of the erythroid transcription factor GATA-1 or the LIM protein rbtn2. Profound reduction in myeloid cells cultured in vivo from tal-1 null yolk sacs suggests a broader defect manifest at the myelo-erythroid or multipotential progenitor cell level.