The promoter-proximal pausing of RNA polymerase II (Pol II) plays a critical role in regulating metazoan gene transcription. Despite the prevalence of Pol II pausing across the metazoan genomes, little is known about the in vivo effect of Pol II pausing on vertebrate development. We utilize the emergence of hematopoietic stem cells (HSCs) in zebrafish embryos as a model to investigate the role of Pol II pausing in vertebrate organogenesis. Disrupting Pol II pausing machinery causes a severe reduction of HSC specification, a defect that can be effectively rescued by inhibiting Pol II elongation. In pausing-deficient embryos, the TGFβ signaling is elevated due to enhanced transcription elongation of key pathway genes, leading to HSC inhibition; in contrast, the IFN-γ signaling and its downstream effector Jak2/Stat3, which are required for HSC formation, are markedly attenuated owing to reduced chromatin accessibility on IFN-γ receptor genes. These findings reveal a novel transcription mechanism instructing HSC fate by pausing-mediated differential regulation of key signaling pathways.