During embryonic development, hematopoietic cells develop by a process of endothelial-to hematopoietic transition of a specialized population of endothelial cells. These hemogenic endothelium (HE) cells in turn develop from a primitive population of FLK1(+) mesodermal cells. Endoglin (ENG) is an accessory TGF-β receptor that is enriched on the surface of endothelial and hematopoietic stem cells and is also required for the normal development of hemogenic precursors. However, the functional role of ENG during the transition of FLK1(+) mesoderm to hematopoietic cells is ill defined. To address this we used a murine embryonic stem cell model that has been shown to mirror the temporal emergence of these cells in the embryo. We noted that FLK1(+) mesodermal cells expressing ENG generated fewer blast colony-forming cells but had increased hemogenic potential when compared with ENG non-expressing cells. TIE2(+)/CD117(+) HE cells expressing ENG also showed increased hemogenic potential compared with non-expressing cells. To evaluate whether high ENG expression accelerates hematopoiesis, we generated an inducible ENG expressing ES cell line and forced expression in FLK1(+) mesodermal or TIE2(+)/CD117(+) HE cells. High ENG expression at both stages accelerated the emergence of CD45(+) definitive hematopoietic cells. High ENG expression was associated with increased pSMAD2/eNOS expression and NO synthesis in hemogenic precursors. Inhibition of eNOS blunted the ENG induced increase in definitive hematopoiesis. Taken together, these data show that ENG potentiates the emergence of definitive hematopoietic cells by modulating TGF-β/pSMAD2 signalling and increasing eNOS/NO synthesis.