The generation of haematopoietic stem cells (HSCs) from human pluripotent stem cells (hPSCs) will depend on the accurate recapitulation of embryonic haematopoiesis. In the early embryo, HSCs develop from the haemogenic endothelium (HE) and are specified in a Notch-dependent manner through a process named endothelial-to-haematopoietic transition (EHT). As HE is associated with arteries, it is assumed that it represents a subpopulation of arterial vascular endothelium (VE). Here we demonstrate at a clonal level that hPSC-derived HE and VE represent separate lineages. HE is restricted to the CD34(+)CD73(-)CD184(-) fraction of day 8 embryoid bodies and it undergoes a NOTCH-dependent EHT to generate RUNX1C(+) cells with multilineage potential. Arterial and venous VE progenitors, in contrast, segregate to the CD34(+)CD73(med)CD184(+) and CD34(+)CD73(hi)CD184(-) fractions, respectively. Together, these findings identify HE as distinct from VE and provide a platform for defining the signalling pathways that regulate their specification to functional HSCs.