Identifying signaling pathways that regulate hematopoietic stem and progenitor cell (HSPC) formation in the embryo will guide efforts to produce and expand HSPCs ex vivo. Here we show that sterile tonic inflammatory signaling regulates embryonic HSPC formation. Expression profiling of progenitors with lymphoid potential and hematopoietic stem cells (HSCs) from aorta/gonad/mesonephros (AGM) regions of midgestation mouse embryos revealed a robust innate immune/inflammatory signature. Mouse embryos lacking interferon γ (IFN-γ) or IFN-α signaling and zebrafish morphants lacking IFN-γ and IFN-ϕ activity had significantly fewer AGM HSPCs. Conversely, knockdown of IFN regulatory factor 2 (IRF2), a negative regulator of IFN signaling, increased expression of IFN target genes and HSPC production in zebrafish. Chromatin immunoprecipitation (ChIP) combined with sequencing (ChIP-seq) and expression analyses demonstrated that IRF2-occupied genes identified in human fetal liver CD34(+) HSPCs are actively transcribed in human and mouse HSPCs. Furthermore, we demonstrate that the primitive myeloid population contributes to the local inflammatory response to impact the scale of HSPC production in the AGM region. Thus, sterile inflammatory signaling is an evolutionarily conserved pathway regulating the production of HSPCs during embryonic development.