The SCL transcription factor is critically important for vertebrate hematopoiesis and angiogenesis, and has been postulated to induce hemangioblasts, bipotential precursors for blood and endothelial cells. To investigate the function of scl during zebrafish hematopoietic and endothelial development, we utilized site-directed, anti-sense morpholinos to inhibit scl mRNA. Knockdown of scl resulted in a loss of primitive and definitive hematopoietic cell lineages. However, the expression of early hematopoietic genes, gata2 and lmo2, was unaffected, suggesting that hematopoietic cells were present but unable to further differentiate. Using gene expression analysis and visualization of vessel formation in live animals harboring an lmo2 promoter-green fluorescent protein reporter transgene (Tg(lmo2:EGFP)), we show that angioblasts were specified normally in the absence of scl, but later defects in angiogenesis were evident. While scl was not required for angioblast specification, forced expression of exogenous scl caused an expansion of both hematopoietic and endothelial gene expression, and a loss of somitic tissue. In cloche and spadetail mutants, forced expression of scl resulted in an expansion of hematopoietic but not endothelial tissue. Surprisingly, in cloche, lmo2 was not induced in response to scl over-expression. Taken together, these findings support distinct roles for scl in hematopoietic and endothelial development, downstream of hemangioblast development.