Significance Epigenetic regulation of cell fate determination is one of the hottest topics today. In this study, we isolated and characterized a zebrafish mutant in histone Lys-specific demethylase 1 (LSD1/KDM1A), and found that LSD1 plays a role in the initiation of hematopoietic differentiation in the hemangioblast, a bipotent cell that can give rise to hematopoietic or endothelial progenitors. In addition, we identified the major function of LSD1 in hemangioblasts to be the down-regulation of Ets variant 2 (Etv2), a critical regulator of hemangioblast development. Our results suggest that the LSD1-dependent shutdown of the Etv2 gene is the significant event required for hemangioblasts to initiate hematopoietic differentiation.