Hematopoietic stem cells (HSCs) underlie the production of blood and immune cells for the lifetime of an organism. In vertebrate embryos, HSCs arise from the unique transdifferentiation of hemogenic endothelium comprising the floor of the dorsal aorta during a brief developmental window. To date, this process has not been replicated in vitro from pluripotent precursors, partly because the full complement of required signaling inputs remains to be determined. Here, we show that TNFR2 via TNF? activates the Notch and NF-?B signaling pathways to establish HSC fate, indicating a requirement for inflammatory signaling in HSC generation. We determine that primitive neutrophils are the major source of TNF?, assigning a role for transient innate immune cells in establishing the HSC program. These results demonstrate that proinflammatory signaling, in the absence of infection, is utilized by the developing embryo to generate the lineal precursors of the adult hematopoietic system.