In vitro differentiation of embryonic stem (ES) cells is often used to study hematopoiesis. However, the differentiation pathway of lymphocytes, in particular natural killer (NK) cells, from ES cells is still unclear. Here, we used a multi-step in vitro ES cell differentiation system to study lymphocyte development from ES cells, and to characterize NK developmental intermediates. We generated embryoid bodies (EBs) from ES cells, isolated CD34(+) EB cells and cultured them on OP9 stroma with a cocktail of cytokines to generate cells we termed ES-derived hematopoietic progenitors (ES-HPs). EB cell subsets, as well as ES-HPs derived from EBs, were tested for NK, T, B and myeloid lineage potentials using lineage specific cultures. ES-HPs derived from CD34(+) EBs differentiated into NK cells when cultured on OP9 stroma with IL-2 and IL-15, and into T cells on Delta-like 1-transduced OP9 (OP9-DL1) with IL-7 and Flt3-L. Among CD34(+) EB cells, NK and T cell potentials were detected in a CD45(-) subset, whereas CD45(+) EB cells had myeloid but not lymphoid potentials. Limiting dilution analysis of ES-HPs generated from CD34(+)CD45(-) EB cells showed that CD45(+)Mac-1(-)Ter119(-) ES-HPs are highly enriched for NK progenitors, but they also have T, B and myeloid potentials. We concluded that CD45(-)CD34(+) EB cells have lymphoid potential, and they differentiate into more mature CD45(+)Lin(-) hematopoietic progenitors that have lymphoid and myeloid potential. NK progenitors among ES-HPs are CD122(-) and they rapidly acquire CD122 as they differentiate along the NK lineage.