Direct clonal analysis of tissue and organ maturation in vivo is a critical step in the interpretation of in vitro cell precursor-progeny relationships. We have developed a method to analyze clonal progenitor contributions in vivo using ES cells stably expressing separate fluorescent proteins and placed into normal blastocysts to form tetrachimeras. Here we applied this method to the analysis of embryonic yolk sac blood islands. In most vertebrates, yolk sac blood islands are the initial sites of appearance of hematopoietic and endothelial cells. It has been proposed that these lineages arise from a common clonal progenitor, the hemangioblast, but this hypothesis has not been tested directly in physiological development in vivo. Our analysis shows that each island has contributions from multiple progenitors. Moreover, contribution by individual hemangioblast progenitors to both endothelial and hematopoietic lineages within an island, if it happens at all, is an infrequent event.