The ETS factor ETV2 (aka ER71) is essential for the generation of the blood and vascular system, as ETV2 deficiency leads to a complete block in blood and endothelial cell formation and embryonic lethality in the mouse. However, the ETV2-mediated gene regulatory network and signaling governing hematopoietic and endothelial cell development are poorly understood. Here, we map ETV2 global binding sites and carry out in vitro differentiation of embryonic stem cells, and germ line and conditional knockout mouse studies to uncover mechanisms involved in the hemangiogenic fate commitment from mesoderm. We show that ETV2 binds to enhancers that specify hematopoietic and endothelial cell lineages. We find that the hemangiogenic progenitor population in the developing embryo can be identified as FLK1(high)PDGFRα(-). Notably, these hemangiogenic progenitors are exclusively sensitive to ETV2-dependent FLK1 signaling. Importantly, ETV2 turns on other Ets genes, thereby establishing an ETS hierarchy. Consequently, the hematopoietic and endothelial cell program initiated by ETV2 is maintained partly by other ETS factors through an ETS switching mechanism. These findings highlight the critical role that transient ETV2 expression plays in the regulation of hematopoietic and endothelial cell lineage specification and stability.