The endothelial to haematopoietic transition (EHT) is a key developmental process where a drastic change of endothelial cell morphology leads to the formation of blood stem and progenitor cells during embryogenesis. As TGFβ signalling triggers a similar event during embryonic development called epithelial to mesenchymal transition (EMT), we hypothesised that TGFβ activity could play a similar role in EHT as well. We used the mouse embryonic stem cell differentiation system for in vitro recapitulation of EHT and performed gain and loss of function analyses of the TGFβ pathway. Quantitative proteomics analysis showed that TGFβ treatment during EHT increased the secretion of several proteins linked to the vascular lineage. Live cell imaging showed that TGFβ blocked the formation of round blood cells. Using gene expression profiling we demonstrated that the TGFβ signalling activation decreased haematopoietic genes expression and increased the transcription of endothelial and extracellular matrix genes as well as EMT markers. Finally we found that the expression of the transcription factor Sox17 was up-regulated upon TGFβ signalling activation and showed that its overexpression was enough to block blood cell formation. In conclusion we showed that triggering the TGFβ pathway does not enhance EHT as we hypothesised but instead impairs it.