Hematopoietic stem cells (HSCs) are self-renewing multipotent stem cells that generate mature blood lineages throughout life. They, together with hematopoietic progenitor cells (collectively known as HSPCs), emerge from hemogenic endothelium in the floor of the embryonic dorsal aorta by an endothelial-to-hematopoietic transition (EHT). Here we demonstrate that transforming growth factor β (TGFβ) is required for HSPC specification and that it regulates the expression of the Notch ligand Jagged1a in endothelial cells prior to EHT, in a striking parallel with the epithelial-to-mesenchymal transition (EMT). The requirement for TGFβ is two fold and sequential: autocrine via Tgfβ1a and Tgfβ1b produced in the endothelial cells themselves, followed by a paracrine input of Tgfβ3 from the notochord, suggesting that the former programs the hemogenic endothelium and the latter drives EHT. Our findings have important implications for the generation of HSPCs from pluripotent cells in vitro.