The c-Myc protein has been implicated in playing a pivotal role in regulating the expression of a large number of genes involved in many aspects of cellular function. Consistent with this view, embryos lacking the c-myc gene exhibit severe developmental defects and die before midgestation. Here, we show that Sox2Cre-mediated deletion of the conditional c-myc(flox) allele specifically in the epiblast (hence trophoectoderm and primitive endoderm structures are wild type) rescues the majority of developmental abnormalities previously characterized in c-myc knockout embryos, indicating that they are secondary defects and arise as a result of placental insufficiency. Epiblast-restricted c-Myc-null embryos appear morphologically normal and do not exhibit any obvious proliferation defects. Nonetheless, these embryos are severely anemic and die before E12. c-Myc-deficient embryos exhibit fetal liver hypoplasia, apoptosis of erythrocyte precursors and functionally defective definitive hematopoietic stem/progenitor cells. Specific deletion of c-myc(flox) in hemogenic or hepatocytic lineages validate the hematopoietic-specific requirement of c-Myc in the embryo proper and provide in vivo evidence to support a synergism between hematopoietic and liver development. Our results reveal for the first time that physiological levels of c-Myc are essential for cell survival and demonstrate that, in contrast to most other embryonic lineages, erythroblasts and hematopoietic stem/progenitor cells are particularly dependent on c-Myc function.