Sox17 is essential for both endoderm development and fetal hematopoietic stem cell (HSC) maintenance. While endoderm-derived organs are well known to originate from Sox17-expressing cells, it is less certain whether fetal HSCs also originate from Sox17-expressing cells. By generating a Sox17GFPCre allele and using it to assess the fate of Sox17-expressing cells during embryogenesis, we confirmed that both endodermal and a part of definitive hematopoietic cells are derived from Sox17-positive cells. Prior to E9.5, the expression of Sox17 is restricted to the endoderm lineage. However, at E9.5 Sox17 is expressed in the endothelial cells (ECs) at the para-aortic splanchnopleural region that contribute to the formation of HSCs at a later stage. The identification of two distinct progenitor cell populations that express Sox17 at E9.5 was confirmed using fluorescence-activated cell sorting together with RNA-Seq to determine the gene expression profiles of the two cell populations. Interestingly, this analysis revealed differences in the RNA processing of the Sox17 mRNA during embryogenesis. Taken together, these results indicate that Sox17 is expressed in progenitor cells derived from two different germ layers, further demonstrating the complex expression pattern of this gene and suggesting caution when using Sox17 as a lineage-specific marker. STEM Cells2012;30:22972308