Haematopoietic stem cells (HSCs) are produced during embryogenesis from the floor of the dorsal aorta. The localization of HSCs is dependent on the presence of instructive signals on the ventral side of the vessel. The nature of the extrinsic molecular signals that control the aortic haematopoietic niche is currently poorly understood. Here we demonstrate a novel requirement for FGF signalling in the specification of aortic haemogenic endothelium. Our results demonstrate that FGF signalling normally acts to repress BMP activity in the subaortic mesenchyme through transcriptional inhibition of bmp4, as well as through activation of two BMP antagonists, noggin2 and gremlin1a. Taken together, these findings demonstrate a key role for FGF signalling in establishment of the developmental HSC niche via its regulation of BMP activity in the subaortic mesenchyme. These results should help inform strategies to recapitulate the development of HSCs in vitro from pluripotent precursors.