The differentiation of hematopoietic progenitors into erythroid or myeloid cell lineages is thought to depend upon relative levels of the transcription factors gata1 and pu.1. While loss-of-function analysis shows that gata1 is necessary for terminal erythroid differentiation, no study has demonstrated that loss of gata1 alters myeloid differentiation during ontogeny. Here we provide in vivo evidence that loss of Gata1, but not Gata2, transforms primitive blood precursors into myeloid cells, resulting in a massive expansion of granulocytic neutrophils and macrophages at the expense of red blood cells. In addition to this fate change, expression of many erythroid genes was found to be differentially dependent on Gata1 alone, on both Gata1 and Gata2, or independent of both Gata factors, suggesting that multiple pathways regulate erythroid gene expression. Our studies establish a transcriptional hierarchy of Gata factor dependence during hematopoiesis and demonstrate that gata1 plays an integral role in directing myelo-erythroid lineage fate decisions during embryogenesis.