Haematopoietic stem cells (HSCs) are self-renewing stem cells capable of replenishing all blood lineages. In all vertebrate embryos that have been studied, definitive HSCs are generated initially within the dorsal aorta (DA) of the embryonic vasculature by a series of poorly understood inductive events^,,. Previous studies have identified that signalling relayed from adjacent somites coordinates HSC induction, but the nature of this signal has remained elusive. Here we reveal that somite specification of HSCs occurs via the deployment of a specific endothelial precursor population, which arises within a sub-compartment of the zebrafish somite that we have defined as the endotome. Endothelial cells of the endotome are specified within the nascent somite by the activity of the homeobox gene meox1. Specified endotomal cells consequently migrate and colonize the DA, where they induce HSC formation through the deployment of chemokine signalling activated in these cells during endotome formation. Loss of meox1 activity expands the endotome at the expense of a second somitic cell type, the muscle precursors of the dermomyotomal equivalent in zebrafish, the external cell layer. The resulting increase in endotome-derived cells that migrate to colonize the DA generates a dramatic increase in chemokine-dependent HSC induction. This study reveals the molecular basis for a novel somite lineage restriction mechanism and defines a new paradigm in induction of definitive HSCs.