Summary The goal of this proposal is to understand how transforming growth factor beta (TGFb) family signaling regulates the formation of hematopoietic stem cells (HSCs) in the embryo. All HSCs in the adult bone marrow are descendants of pre-hematopoietic stem cells (pre-HSCs) that differentiate from hemogenic endothelial (HE) cells in the major caudal arteries of the embryo. However, only a subset of hematopoietic cells that differentiate from HE cells in the arteries are pre-HSCs, while many are committed lympho-myeloid biased progenitors. We generated a comprehensive single cell dataset covering the developmental trajectory of blood cell formation from HE cells and identified genes specifically expressed in pre-HSCs. We demonstrate that one of these genes, Smad7, which is a negative regulator of TGFb family signaling, is required for the formation of multi-lineage adult-repopulating HSCs in the embryo but is not required for the generation of lympho-myeloid biased progenitors. The goals of this proposal are to determine at what step of HSC formation or function the restraint of TGFb family signaling by SMAD7 is required (pre-HSC formation, pre-HSC to HSC maturation, HSC self-renewal), and which TGFb family signaling pathway SMAD7 restrains to allow HSCs to form in the embryo or function in the adult.