The ability to generate a wide spectrum of differentiated cell types from ES cells in culture offers a powerful approach for studying lineage induction and specification and a promising source of progenitors for cell replacement therapy. Although significant efforts are being made to optimize culture conditions for the generation of different cell populations from ES cells, the identification and efficient isolation of specific progenitors for many lineages within these cultures remains a major challenge. By specifically tracking hematopoietic and cardiac development, we demonstrate here that these two lineages arise from distinct mesoderm subpopulations that develop in sequential waves from pre-mesoderm cells. Access to these populations provides a unique approach to isolate and characterize the earliest progenitors of these lineages.