We investigated the mechanisms of intermediate cell mass (ICM) expansion in zebrafish chordin (Chd) morphant embryos and examined the role of BMPs in relation to this phenotype. At 24 h post-fertilization (hpf), the expanded ICM of embryos injected with chd morpholino (MO) (Chd(MO) embryos) contained a monotonous population of hematopoietic progenitors. In situ hybridization showed that hematopoietic transcription factors were ubiquitously expressed in the ICM whereas vascular gene expression was confined to the periphery. BMP4 (but not BMP2b or 7) and smad5 mRNA were ectopically expressed in the Chd(MO) ICM. At 48 hpf, monocytic cells were evident in both the ICM and circulation of Chd(MO) but not WT embryos. While injection of BMP4 MO had no effect on WT hematopoiesis, co-injecting BMP4 with chd MOs significantly reduced ICM expansion. Microarray studies revealed a number of genes that were differentially expressed in Chd(MO) and WT embryos and their roles in hematopoiesis has yet to be determined. In conclusion, the expanded ICM in Chd(MO) embryos represented an expansion of embryonic hematopoiesis that was skewed towards a monocytic lineage. BMP4, but not BMP2b or 7, was involved in this process. The results provide ground for further research into the mechanisms of embryonic hematopoietic cell expansion.