The stem-cell leukemia (SCL, also known as TAL1) gene encodes a basic helix-loop-helix transcription factor that is essential for the initiation of primitive and definitive hematopoiesis, erythrocyte and megakarocyte differentiation, angiogenesis, and astrocyte development. Here we report that the zebrafish produces, through an alternative promoter site, a novel truncated scl (tal1) isoform, scl-beta, which manifests a temporal and spatial expression distinct from the previously described full-length scl-alpha. Functional analysis reveals that while scl-alpha and -beta are redundant for the initiation of primitive hematopoiesis, these two isoforms exert distinct functions in the regulation of primitive erythroid differentiation and definitive hematopoietic stem cell specification. We further demonstrate that differences in the protein expression levels of scl-alpha and -beta, by regulating their protein stability, are likely to give rise to their distinct functions. Our findings suggest that hematopoietic cells at different levels of hierarchy are likely governed by a gradient of the Scl protein established through temporal and spatial patterns of expression of the different isoforms.