The hemangioblast is a progenitor cell with the capacity to give rise to both hematopoietic and endothelial progenitors. Currently, the regulatory mechanisms underlying hemangioblast formation are being elucidated, whereas those controllers for the selection of hematopoietic or endothelial fates still remain a mystery. To answer these questions, we screened for zebrafish mutants that have defects in the hemangioblast expression of gata1, which is never expressed in endothelial progenitors. One of the isolated mutants, it627, showed not only down-regulation of hematopoietic genes but also up-regulation of endothelial genes. We identified the gene responsible for the it627 mutant as the zebrafish homolog of Lys-specific demethylase 1 (LSD1/KDM1A). Surprisingly, the hematopoietic defects in lsd1it627 embryos, both erythropoiesis and ectopic myelopoiesis, were rescued by the gene knockdown of the Ets variant 2 gene (etv2), an essential regulator for hemangioblast development. Our results suggest that the LSD1-dependent shutdown of etv2 expression may be a significant event required for hemangioblasts to initiate hematopoietic differentiation.